holiday pay: contract may enforce 'use it or lose it'
principle
Although the provisions on carry over of holiday when an
employee has been off sick are currently the subject of much debate
(see this month's article on holiday and sick
leave), a recent case has confirmed that where there
is no such reason, holiday may be lost if the required notice is
not given before the end of the leave year. An employee's holiday
year ended on 31 March. On 6 March he requested payment in respect
of outstanding holiday that he was due before the end of the leave
year (he had no further work scheduled that month). His employer
did not pay it, reminding him that he was contractually required to
give four weeks' notice of holiday. It refused to pay him in
lieu or let him carry the holiday over into the next holiday year.
The employee claimed constructive dismissal.
The EAT had to consider whether an employer is
legally obliged to permit an employee to take all of his paid leave
within the leave year even if requested towards the end of the
leave year when it may not fit in with the staffing patterns of the
business. It concluded that statutory or contractual notice
provisions could operate to result in a worker losing the right to
take leave at the end of the leave year. The Stringer case
envisaged that leave could be lost at the end of the leave year as
long as the worker had actually had the opportunity to exercise the
right to take statutory annual leave (eg holiday provisions being
operated fairly during the course of the year). If notice
provisions are operated in an unreasonable, arbitrary or capricious
way this could lead to grievances and claims of constructive
dismissal. In this case, although the leave could be lost, another
Tribunal would have to consider whether the employer had been
reasonable in its refusal when the contract had provided for some
exceptions. Helpful for employers – but a refusal of holiday which
would result in leave being lost entirely should always be handled
with care.
<<back to bulletin main
menu
