Sickness and Holiday Leave - ET Rejects Backdated Claim

The ruling of the House of Lords in Stringer and Others v HM Revenue and Customs – that employees who are off work due to sickness for more than a year who have been denied their entitlement to statutory holiday pay can bring a claim under the Employment Rights Act 1996 (ERA) for an unlawful deduction from wages – has opened the way for backdated claims on this issue. Where an employee brings a claim under the ERA, if it can be shown that the most recent deduction is just one in a series of unlawful deductions then, provided the claim is brought within three months of the last deduction, there is no time limit on how far back the claim can go.

In one such case (Khan v Martin McColl), the Employment Tribunal (ET) considered whether or not the payment of the employee’s accrued holiday entitlement for the year in which he resigned meant that the employer was able to defeat a claim relating to earlier years.

Mr Khan began working for Martin McColl in 2007, following a ‘relevant transfer’ under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). It was agreed at that time that he could carry forward to 2008 two weeks’ accrued holiday that he had not used. In May 2008, he went on sick leave, without having taken any further holiday, and did not return to work prior to his resignation in August 2009. On his termination, Martin McColl paid Mr Khan in lieu of his accrued statutory holiday entitlement for 2009. Mr Khan claimed that he had been denied his full holiday entitlement and sought to recover the two weeks’ accrued leave relating to 2007 and a further four weeks’ untaken holiday for 2008 by way of an unlawful deduction from wages claim.

The ET rejected Mr Khan’s claim that he had been denied the opportunity to take his holiday entitlement as he had not requested any leave. In addition, the ET found that his employer’s payment in lieu of his accrued holiday entitlement for the year in which he resigned had effectively broken the chain of deductions, thus rendering his backdated claim for unused holiday out of time. The fact that he was unaware at that time of his right to claim was not sufficient reason to allow the claim to succeed.