The Working Time Regulations 1998 (WTR) require workers to take their statutory holiday entitlement in the year it is due; it cannot be replaced by a payment in lieu other than upon termination of employment. The ECJ, however, in Pereda v Madrid Movilidad SA, held that if workers do not wish to take their holiday entitlement during sickness absence it can be taken at some other time, including carrying it over to the next leave year. Following Pereda, the Court of Appeal, in NHS Leeds v Larner held that the WTR must be read to allow a worker to carry over untaken holiday into the next leave year where he or she was “unable or unwilling” to take it because of sickness absence.

In Plumb v Duncan Print Group Ltd, Plumb was on sick leave from 26 April 2010 until his employment ended on 10 February 2014.  He did not take or request annual leave from 26 April 2010 to 31 January 2013. In September 2013, Plumb requested permission to take the annual leave that he had not taken in 2010, 2011, and 2012 and his leave for 2013.  The employer agreed to, and paid for, holiday due for the current leave year, but refused to pay for the 2010, 2011 and 2012 leave years.  An employment tribunal rejected Plumb’s claim that the employer had breached the WTR by failing to make a payment in lieu of his holiday entitlement due for 2010 to 2012. The ET decided that the relevant issue was whether Plumb was “unable” to take his leave due to sickness, but no persuasive medical evidence had been presented to show this was the case.

The EAT held that the Court of Appeal’s decision in Larner did not lay down a legal principle that an employee who was on sick leave needed to demonstrate that he was unable, by reason of his medical condition, to take annual leave. Furthermore, if a worker does not “wish” to take annual leave during periods of sick leave, he or she is entitled to take it at a later date. However, Plumb was not entitled to holiday pay for 2010 to 2012 because the ECJ in KHS AG v Schulte had ruled that there was not an unlimited right to carry over periods of annual leave to subsequent years. The International Labour Convention allows for holiday to be postponed for up to 18 months after the end of the leave year and therefore the WTR was to be read as permitting a worker to take annual leave within 18 months of the end of the leave year in which it was accrued where the worker was unable or unwilling to take annual leave because he was on sick leave and, as a consequence, did not exercise the right.

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