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A stroll through the world of holiday pay and leave
Karen Thomson MSc ChFCIPPdip FHEA, UK payroll director, AAB, discusses the complexities payroll professionals face when considering holiday pay and leave calculations
O r should I say, case laws galore. Way back when, holiday leave calculations were carried out by human resources (HR), and payroll had very little to do with them. The payment of such things wasn’t complicated, as it would be based on a company’s terms and conditions. We then had the Working Time Directive in 1993, which led to the Working Time Regulations in 1998, and we had statutory leave entitlement. Since then, of course, the UK extended the leave entitlement to account for bank holidays, because of employers forcing workers to take them as part of their leave entitlement. All good but now we have regulations, and we should have known then that they would end up being tested through the courts. Case upon case… My very first interaction with a holiday pay case which impacted payroll was that of Stringer. In 2009, in HM Revenue and
Customs (HMRC) v Stringer (formerly Ainsworth), the European Court of Justice (ECJ) ruled that workers on sick leave continue to accrue annual leave, and if not able to take it during their period of sickness, can carry it over into the next leave year. The case was referred to the House of Lords and it was confirmed that leave could be taken during sick leave, and a worker would be paid their usual pay during that time.
much time could elapse for carry over of leave, and in this case, the ECJ stated 15 months was reasonable. However, it still caused confusion here in the UK, as this was due to a collective agreement in Germany. The Plumb v Duncan Print Group along with National Health Service (NHS) v Larner case resulted in the ECJ deciding that at most, employees on sick leave should be able to take holiday within a period of 18 months of the end of the year in which the annual leave arose. So now we have 15 months and 18 months. Most employers look to 18 months, just to be safe. There were challenges in the UK as to what leave could be carried over, the European Union (EU) entitlement of 20 days or the UK entitlement of 28 days? The Sood Enterprises v Healy case confirmed it was just 20 days and this still stands today. In fact, any new cases relating to holiday pay and leave are around the 20 days and not the 28 days.
“This one case resulted in many others going through”
This one case resulted in many others going through and another one that sticks out for me was the KHS AG v Schulte C. This was a German case based on how
| Professional in Payroll, Pensions and Reward | July - August 2023 | Issue 92 56
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