A holiday pay victory for employers!

22 October, 2010
Page 1 

Employees accrue annual leave during periods of sickness absence. But a new case seems to offer you a tactic that can limit the impact. So how does it work?

The case of HM Revenue & Customs v Stringer 2009 was not welcomed by employers. Firstly, the House of Lords left many questions about sickness absence and annual leave entitlements unanswered. But in a shock move, it also ruled that employees could mount claims for unpaid holiday pay via an unauthorised deduction-from-wages claim. In theory, these could go back up to six years.

One year on and a recent tribunal case, Kahn v Martin McColl 2010, suggests that employers can get around this. So what happened? Khan (K) had been on long-term sick leave. Upon resigning, he claimed:

1) two weeks' holiday owed to him from the 2008 leave year; and

2) all of his 2009 holiday entitlement.

He was only paid for 2009.

K then lodged an unauthorised deduction-from-wages claim to recover his holiday pay from 2008. In response, Martin McColl (M) argued that, as he had been paid his accrued holiday entitlement for 2009, the last unauthorised deduction had been pushed back to the end of the 2008 leave year. As this type of claim must be submitted within three months, M said K was out of time.

The tribunal accepted this argument and rejected K's claim. It is unlikely that this will be the last we hear on this subject, but for now, this latest case is a victory for employers and offers you a helpful new tactic when dealing with a claim of this sort.

Although this is a tribunal ruling so it won't be binding on other cases it suggests that claims for several years' worth of accrued holiday pay can be defeated simply by paying the amount for the most recent leave year. Arguably, you only need to go back three months to stop the time limit from running but as yet this is untested.





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