Holiday Pay and Sick Leave

Employers can defeat claims for more than one year’s holiday pay from sick employees by making a payment covering their most recent leave year, a tribunal has ruled.

Holiday issues are among the most common problems that employers deal with, and the legal position on how holidays and sick leave interrelate is still uncertain.

Ever since the outcome of the Stringer case last year – where the House of Lords ruled that failure to pay holiday pay can be an unauthorised deduction from wages – employers have been faced with uncertainty.

Legal experts warned that one effect of the Stringer case was that an employee could bring a claim for payment in lieu of accrued holiday pay, going back over previous leave years, as a series of unauthorised deductions.

But in the case of Kahn v Martin McColl, the tribunal ruled that payment for a sick employee’s final holiday year entitlement meant an unauthorised deduction claim for previous leave years’ holiday pay was out of time.

Although the decision was not binding on other tribunals or courts, it highlights a tactic that may work for employers.

“The Working Time Regulations prevent employees from carrying over holiday to subsequent leave years, and this decision appears to be the first to consider whether or not an employer can break a chain of unauthorised deductions, and thereby defeat a claim for more than one year’s holiday pay, by paying the employee for the most recent leave year.”

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