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Legal Updates

Holiday and sickness - an update

13 August 2010 #Employment

The House of Lords in HM Revenue & Customs v Stringer [2009] held that claims for holiday pay can be a series of deductions.  Since the decision, employers have been apprehensive that employees who have been off sick for several years may be able to claim backdated holiday pay for the whole period upon termination.  This issue came to light in the recent case of Khan v Martin McColl [2010]. 

At the time of commencing long-term sick leave in May 2008, Mr Khan had accrued 6 weeks` unpaid and untaken holiday (2 weeks` of which had been carried forward from 2007 and the remainder being Mr Khan`s entitlement for 2008).  Mr Khan did not return to work and resigned in August 2009. 

Upon termination, Mr Khan was paid in lieu by Martin McColl for the holiday he accrued during 2009 only.  Consequently, he brought a claim for the 6 weeks` accrued but untaken holiday (from 2007 and 2008), arguing that his employer had made a series of deductions from his wages.  The claim was defeated on two fronts:

  1. It was out of time - in cases involving a series of deductions, the time limit for filing unlawful deductions claims is 3 months from the date of the last deduction.  The tribunal held that the payment made to Mr Khan in lieu of holiday that he had accrued in 2009 had in fact broken the series of deductions.  This meant that he had to have brought his claim by 31 March 2009 in order to recover the outstanding 6 weeks` pay, as the right to holiday pay for 2008 expired on 31 December 2008 (this being the date of the last deduction).
  2. No "denial" of holiday - the tribunal referred to the ECJ finding in Stringer that workers are entitled to carry their holiday entitlement forward if they are "denied" their holiday.  As Mr Khan did not apply to take holiday in 2007, 2008 and 2009, the Tribunal held that he had not been "denied" the right to take this. 

Whilst this is only a tribunal decision, it will be persuasive.  The case is interesting as it demonstrates that employers can potentially defeat claims for over one year`s holiday entitlement by making a payment covering the employee`s most recent leave year.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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