UK and EU: Statutory holiday - ECJ confirms limit on carry-over; EAT rules no right to pay unless take or request time off

The ECJ has confirmed that Member States can lawfully require carried over statutory holiday to be taken within the following 15 months or else be extinguished, agreeing with the opinion of its Advocate-General issued in the summer (KHS v Schulte, ECJ).  Employers must hope that the Government chooses to use this option when amending the Working Time Regulations following its recent consultation on changes to reflect case law developments.

Meanwhile, the EAT continues to issue conflicting rulings on whether an employee is only entitled to statutory holiday pay if they take holiday or give notice that they wish to do so.  In 2004 the EAT in Canada Life v Gray suggested that the right to pay in lieu on termination was preserved even if the right to take holiday had been extinguished at the end of each holiday year.  In NHS Leeds v Larner the EAT recently ruled 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 even if the employee failed to request holiday during the relevant year or expressly request that it be carried over.

This month the EAT has taken the opposite view, ruling that employees are only entitled to holiday pay if they seek to exercise their right to take leave by giving notice, or at least request that it be carried over if unable to take leave due to sickness.  The EAT also rejected the employee's argument that her employer had an obligation to inform her of the need to exercise her rights in this way. (Fraser v South West London St George's Mental Health Trust, EAT) 

Hopefully the Court of Appeal will provide clearer guidance when it hears the appeal in Larner early next year.