UK: Holiday - statutory entitlement carried over when employee sick for full year

The EAT has confirmed that statutory holiday entitlement can be carried over to the following holiday year (notwithstanding that this conflicts with the express provisions of the relevant regulations) where an employee has been off sick for the entire holiday year.  It can then be paid in lieu on termination.  The employee does not need to have requested holiday during the relevant year, nor expressly requested that it be carried over. 

Obiter, the EAT contrasted the position of a fit worker who fails to request statutory holiday during the relevant leave year.  They might lose their holiday entitlement, certainly if the employment contract so provides.  The EAT assumed that, if the right to take holiday has been extinguished, so has the right to pay in lieu on termination - although it did not consider a previous EAT ruling to the contrary.   Leave to appeal has been sought. (NHS Leeds v Larner, EAT)

This ruling confirms that employees on PHI may be able to carry over several years' worth of holiday entitlement and be paid in lieu on termination.  The Advocate-General of the ECJ has recently given a non-binding opinion that Member States can lawfully require carried over leave to be taken within the following 18 months or else be extinguished (KHS v Schulte, ECJ).  Employers will therefore hope that the ECJ agrees and that the Government chooses to use this option when amending the regulations following their recent consultation on changes to reflect case law developments.