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Employee leave and unpaid holiday

View profile for Karen Edwards
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In the recent employment tribunal case, Khan v Martin McColl Ltd, the tribunal held that a claim for unlawful deductions from wages, arising out of an employer’s failure to pay holiday pay in respect of a leave year during which the employee was ill, was time-barred.

The employer had paid the employee his final year’s holiday pay on termination, with the result that the employee could not assert that his claim for unpaid holiday pay in respect of the previous leave year formed part of a series of deductions, thereby keeping the claim in time. Furthermore, an employee unable to exercise his right to annual leave on account of sickness cannot carry it forward into the next leave year, unless he or she has so requested in the relevant leave year.

Although this decision is not binding on other tribunals, employers with staff on long-term sick leave would be wise to pay their final year’s holiday on termination to reduce the likelihood of a tribunal finding a series of deductions, which would enable a claimant to stay within the time limit in respect of claims for unpaid holiday relating to previous leave years. If the employer had done so in Rawlings v Direct Garage Door Co Ltd, perhaps that tribunal would not have found that Rawlings could recover untaken holiday that had accrued over a 15-month period of sick leave. Conversely, employees on long-term sick leave should ensure they put in annual requests for holiday pay to ensure it is not lost in the event of termination. Contact us for advice on this subject.

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