Holiday Pay Can Be Accrued While on Sickness Absence

In Her Majesty's Revenue and Customs (Respondents) (HMRC) v Stringer and others (Appellants) [2009] UKHL 31, the House of Lords unanimously held that holiday pay can be accrued while on sick leave. Furthermore, workers who are denied holiday pay while on sick leave can bring a claim in the Employment Tribunal for unauthorised deductions from wages under the Employment Rights Act 1996 ("ERA").

Claims to enforce entitlement to holiday pay under the Working Time Regulations 1998 (the "Regulations") can now be pursued both as unauthorised deductions claims under the ERA and under the Regulations. The practical effect of this is that a worker can take advantage of the more generous time limits which apply to unlawful deductions claims under the ERA. In particular, a claim for unlawful deductions from wages can be brought within three months of the last in a series of deductions, as opposed to three months from the date of each deduction, as stipulated by the Regulations. This would allow an unlawful deductions claim to go back more than three months if the underpayments relate to part of a series.

The main substantive issue in this case - namely, whether workers absent on sick leave can still accrue annual leave - was referred to the European Court of Justice ("ECJ") by the House of Lords. While the ECJ answered questions on this and related issues in a judgment given in January this year, this was not revisited by their Lordships in their decision in the present case, as HMRC declined to pursue its arguments before the House of Lords. It follows that workers continue to accrue and are entitled to take statutory annual leave while off sick. In addition, they are entitled to be paid in respect of such leave, even where they have exhausted their statutory and contractual sick pay entitlements.