November 4

TUPE…….in a nutshell!

The purpose of TUPE is to protect employees if the business in which they are employed changes hands. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law.

Why do you need to know anything about TUPE?

TUPE applies every day to an enormous number of different business transactions and it is essential that employers of all sizes understand what employment liabilities can arise. TUPE can apply when employers:

* sell or buy part or all of a business as a going concern;
* outsource or bring a service back in-house;
* grant or take over a lease or licence of premises and operate the same business from those premises.

What do you need to know about TUPE?

To protect your business from claims, you need to understand:
* when TUPE is likely to apply;
* what TUPE means legally;
* what you have to do to comply with TUPE and the penalties for failing to do so;
* what other steps you can take to protect your business from the effects of TUPE.

When is TUPE likely to apply?

In essence, TUPE applies where there is a transfer of an economic entity which retains its identity. In determining whether this has happened, the courts take into account factors such as:
*the type of undertaking being transferred;
*whether any tangible assets (buildings, moveable property etc) are transferred;
*whether any intangible assets are transferred and the extent of their value;
*whether the majority of the employees are taken on by the new employer;
*whether any customers are transferred;
*the degree of similarity between the activities carried on before and after the transfer;
*the period for which the activities were suspended, if any.

What does TUPE mean legally?

Employees who are employed in the undertaking which is being transferred have their employment transferred to the new employer. Employees can refuse to transfer (or “opt-out”), but depending on the circumstances of the case, they can lose valuable legal rights if they do.

Employees therefore have the legal right to transfer to the new employer on their existing terms and conditions of employment and with all their existing employment rights and liabilities intact. The new employer steps into the shoes of the old employer and it is as though the employee’s contract of employment was always made with the new employer.

Any dismissals will be automatically unfair, where the main reason for the dismissal is the transfer or a reason connected to the transfer – there is a defence but it is narrow in scope and can be difficult to rely upon. The new employer is required to take on the employees on their existing terms and conditions of employment and is prohibited from making any changes to them – unless the aforementioned defence applies. This often makes it difficult, if not impossible, for incoming employers to harmonise terms and conditions of employment of staff after a TUPE transfer.

What do you need to do to comply with TUPE?

(1) Outgoing employer must inform and consult with staff
Affected employees must be consulted on the transfer, any measures proposed, and on changes or proposals for change following the transfer. A failure to inform and consult may result in a claim to the tribunal which may award up to a maximum of 13 weeks’ pay per affected employee.

(2) Outgoing employer must provide employee liability information to incoming employer
Written details of the transferring employees, together with all associated rights and liabilities that will transfer, must be provided not less than 14 days before the transfer. A failure to comply with this duty may result in a claim to the tribunal for compensation which will be assessed with regard to the losses suffered with a minimum award of £500 per employee.

A failure to comply with TUPE could therefore expose employers to claims large enough to undermine the entire transaction.

What other practical steps can you take to protect your business from the effects of TUPE?
Although there is nothing anyone can do to prevent TUPE applying (it is not possible to contract out of TUPE), there are steps which both the outgoing and incoming employers can take to divide up TUPE liabilities contractually between them.

Whilst under TUPE employment liabilities connected to the transferring employees will always transfer to the incoming employer (so employee claims should always be made against the new employer), the parties can still agree contractually to divide up the liabilities between them in a different way. This ought to be done by means of contractual indemnities. If this is something you think would be useful for your business, you should always take specialist legal advice.

TUPE in insolvency

Finally, TUPE is relaxed to protect incoming employers where the exiting employer is insolvent. The liability for redundancy, notice and some other payments to employees will not transfer to the incoming employer. Also, terms and conditions of employment can be changed (without the noted businesses, thereby safeguarding employment, where the inherited liabilities are not so onerous.

August 11

How to avoid the pitfalls of giving a reference…..

Writing a reference for an employee’s new employer can land you in legal hot water – there are rights and obligations you need to consider when providing a reference which will ensure that you stay safe but are fair.

What can go wrong?
If you give a reference, you have a duty to the employee and the new employer to take reasonable care to ensure it is true, accurate and fair and that it is not misleading.

If you provide a bad reference that you can’t substantiate, you run the risk of your employee suing you for damages if they didn’t get the job, or suffered some other financial loss, because of it. In a worst case scenario, they could even bring an action against you for defamation or discrimination.

The new employer could also claim damages against you if you give a glowing reference for an employee who has not in fact been satisfactory, and that person goes on to perform badly in their new job.

Options

1. Giving no references
One option is to refuse, as a matter of policy, to give references for any employee but this is unusual and failure to give a reference, without any explanation, can also imply that you have had problems with the employee. This could give rise to claims that you have discriminated against them and they could also argue that you have broken the term of mutual trust and confidence that is implied in every employee’s contract of employment. So, if you have a policy of not giving references, respond to each request for a reference with a specific statement that it is not your policy to give them, to avoid misunderstandings.

2. Giving the bare facts
Many employers provide only bare facts – the position(s) held by the employee, salary and other benefits, sickness record and commencement and termination dates. State that this is your policy on the reference you give, so that the new employer does not read anything into the fact that you have not provided fuller details.

3. Giving a full reference
Most full references include the bare facts, plus key responsibilities, an assessment of the employee’s performance and views on their personal qualities relevant to the positions held.

The duty to take care to be true, accurate and fair, and not to be misleading, means you should avoid:
• Failing to respond to specific questions in a request for a reference without explaining why.
• Omitting key information that a new employer would expect you to disclose.
• Organising the information in a way that would give a reasonable person a wrong inference or impression of the employee.
• Saying that an employee is suitable for the role advertised – you do not know what the job entails. If you must say this, qualify it by saying it is your opinion only.
• If an employee’s performance has been poor or they were dismissed for serious misconduct, refer specifically to the problems experienced with the employee (as well as any positive points, in the interest of balance). It is dangerous to leave them out if they are material. A bad reference is permissible, provided that it is not malicious and that you took reasonable care to ensure that the information is true – for example, by investigating any matter giving rise to the bad reference.
• If an employee has been dismissed, ensure that the statements made in the reference tally with the reasons given for the dismissal.
• If the employee is senior enough, agreeing the wording of their reference with them may be part of a settlement agreement.

Avoid inconsistency – giving a reference in one case and not another, or giving only a factual reference to one employee and a full reference to another – as this could give rise to a claim of discrimination by a disgruntled employee. It is best to establish a policy that states whether you will give references or not and, if you do, who may give them and what they should contain.

Disclosure of the reference
If your ex-employee asks to see the reference, you do not have to disclose it. However, the new employer has to if you have consented to its disclosure it is ‘reasonable in all the circumstances’ that the new employer should do so.

Take advice before giving any reference if it is important to you that your employee should not see it, or parts of it that you consider confidential – at the very least you should make it clear to the new employer that you do not consent to disclosure of the reference, or the confidential parts of it, to the employee.

If the new employer is obliged to disclose the reference, generally they should take care not to disclose any part of it that relates to another person.

Disclaimers
Disclaimers excluding liability for the accuracy of the reference are of limited effect – they will protect you only if they are reasonable. Attempts to exclude liability for a statement that can reasonably be expected to be something an employer should know, is likely to fail. That said, you may wish to include a disclaimer in your references as a ‘belt and braces’ measure.

Third parties
All references should be marked ‘private and confidential’, to make it clear that they are intended only for the person to whom the reference is given (the new employer for example), and must not be disclosed to, or relied on, by any third party – whether by your staff giving the reference, the new employer or, if they obtain sight of a copy, the employee to whom it relates. Some employers include a specific statement in the reference that no third party is to rely on it.

Always take legal advice if in doubt!

June 9

Ensuring employee engagement throughout the World Cup!!!

As with any major sporting event, the 2014 football World Cup is likely to affect employers and may present them with some challenges. Employers may be faced with competing annual leave requests from staff, and may have to deal with unauthorised absence or employees attending work under the influence of alcohol. However, the tournament could also provide employers with opportunities to improve employee engagement. Employers should give some thought as to how they will meet these challenges and maximise any employee engagement opportunities.

Some top tips for employers to consider for the 2014 World Cup:

Annual leave – employers may wish to look at being a little more flexible when allowing employees leave during this period and employees should remember that it may not always be possible to book leave off. The key is for both parties to try and come to an agreement. All requests for leave should be considered fairly. A consistent approach should be applied for leave requests for other major sporting events too as not everyone likes football!

Sickness absence – levels of attendance should be monitored during this period in accordance with the company’s attendance policy. Any unauthorised absence or patterns of absence could result in formal proceedings. This could include the monitoring of high levels of sickness or late attendance due to post match hangovers.

Flexibility – one possible option is to have a more flexible working day. Employees could come in a little later or finish sooner and then agree when this time can be made up. Allowing staff to listen to the radio or watch the TV may be another possible option. Employers could also allow staff to take a break during match times. Another option is to look at allowing staff to swap shifts with their manager’s permission. It is important to be fair and consistent with all staff if you allow additional benefits during the World Cup. Any change in hours or flexibility in working hours should be approved before the event.

Use of social media and websites – there may be an increase in the use of social media such as Facebook, Twitter or websites covering the World Cup. Employers should have a clear policy on web use in the workplace that is communicated to all employees. If employers are monitoring internet usage then the law requires them to make it clear that it is happening to all employees.

Drinking or being under the influence at work – some people may like to participate in a drink or two while watching the match or go to the pub to watch a match live. It is important to remember that anyone caught drinking at work or under the influence of alcohol in the workplace could be subject to disciplinary procedures. There may be a clear no alcohol policy at work and employees may need a reminder.

In a nutshell, it is wise to have a clear and fair policy that balances your need to run your business with your employees’ desire to keep up to date with scores!!!

May 9

The introduction of shared parental leave might feel like something for 2015 but employers are likely to feel the impact sooner.

Although the right to take shared parental leave and pay is being introduced for parents with children due on or after 5 April 2015, those mothers-to-be will be having their 12-week scans this September 2014, informing their employers of their pregnancy soon after, and prospective fathers have the right to take time off to attend two antenatal appointments from 1 October 2014.

Under the new ‘shared parental leave’ regime, mothers who want to return to work before their maternity leave finishes will be able to gift the remaining leave to the child’s father, or share it with them in chunks.

The new regime will allow parents to share the statutory maternity leave and pay currently only available to mothers. This will replace the existing provisions on additional paternity leave (APL). The new system will also apply to adoptions where the adoption matching or placement date is on or after this date.

The current entitlement to 52 weeks of maternity leave and 39 weeks of statutory maternity pay will remain the default position. The new shared parental leave regime, therefore, offers an alternative to parents. Under the regime, the mother will still be required to take the first two weeks’ leave following childbirth for health and safety reasons. However, the remaining 50 weeks’ leave and 37 weeks’ statutory pay can be shared between the mother and father. The choice of how to share the leave and pay is a matter for agreement between the working parents and their employers.

With regard to leave, under the new regime employees may, provided their employer approves, be able to intersperse periods of shared parental leave among periods of work. Employers should consider what approach they will take to requests for discontinuous periods of leave. They should think about how they will provide cover for the employee’s work in these circumstances and how they will monitor how much leave an employee has taken.

It is also important to note that parents will be able to take leave at the same time under the new shared parental leave regime. Employers should be prepared to deal with the situation where two employees in the same department are expecting a baby together and wish to take shared parental leave simultaneously.

With regard to pay, employers who already offer enhanced maternity pay to female employees on statutory maternity leave will need to decide whether or not they will offer enhanced shared parental leave in a similar way – over and above the statutory entitlement. One factor to be remembered when making this decision is that if enhanced pay is available for employees on maternity leave but not for those on shared parental leave there may be a risk of sex discrimination.

Only around a third of working families are likely to be eligible for this added flexibility, since both mum and dad will need to have worked for their respective employers continuously for 26 weeks at the 15th week before the expected week of childbirth.

For some eligible families, where mum is the high earner, it could work well. But parents will have to plan and negotiate their use of the leave carefully, and how many parents will feel safe enough to risk it remains to be seen.

March 6

Flexible working: what you need to know ahead of the rules.

The extensions to current legislation on flexible working are due later this year, giving more employees with service of six months or more rights to request flexible working.

The new legislation will require employers to consider requests for greater flexibility in terms of hours, times and location from a greater proportion of their workforce, which means employers will need to be prepared.

Historically, flexible working legislation was intended mainly for childcare, and later broadened out to allow for other types of care. Employers have not found these rules too onerous but some fear challenges when the reasons for the requests become more diverse, such as for religious observance and lifestyle choice.

The new laws need not be such a cause for worry, however. With some planning it should be possible to turn a regulatory requirement into an opportunity to create positive cultural changes throughout your organisation.

Here are some tips on how to plan for the new rules:

1. Don’t panic. You have most of the knowledge and skills to handle these changes, you just need to change your mind set and think about context. The requests that staff make (changes to hours, times, locations) will be no different – it’s their reasons that may differ.

2. Review policy and process. This is an opportunity to make your process more user-friendly for both sides. The tight response times will disappear, replaced by a principle-based system that makes the rules easier.

3. Take the opportunity to refresh knowledge. Everyone will need to be up to speed on the circumstances in which the right to request flexible working will apply. There are eight reasons why a flexible working request might not be granted because it is not appropriate for your business:
Planned structural changes
Burden of additional costs
Detrimental impact on quality
Inability to recruit additional staff
Detrimental impact on performance
Inability to reorganise work among existing staff
Detrimental effect on ability to meet customer (or client) demand
Insufficient work during the periods the employee proposes to work.
These, plus how the indirect discrimination rules relate to them, need to be clear to all.

4. Think broadly. Ask all concerned to think about the broader impact of more flexible working in your organisation. For example, any data security risks that come with more people accessing company systems from away from the office. Do you have a remote working policy in place?

5. Be balanced. Think about both the benefits and the challenges of better work-life balance. There will be a positive effect on morale, but managers may need coaching to adapt their management style to the differences between managing a present team and a distributed one, or a team that work different hours from one another.

The new flexible working rules may support initiatives to improve workplace culture and help to create a great place to work. If there is one disadvantage to the current system, it is that it favours only one element of the workforce (those with family and care commitments). The new laws will solve that problem by including everybody, so this is an opportunity to do more than just demonstrate compliance.

February 10

Ten top tips for keeping employees engaged through change.

When an organisation experiences change it can be tough to retain a culture that evolves and embraces everyone. Ten top tips for successfully managing change and engaging staff during these times are:

1. Communicate, communicate, communicate
Communication really does matter if you want to win the hearts and minds of your team and encourage people to get behind the change. By communicating openly with employees, not only can you reassure them where possible, you can ensure that they are the first to know about the change before it happens. It also provides them with an opportunity to feed into the process to help make the change work.

2. Lead from the front
Great leaders are great communicators who know how to unite everyone and inspire confidence in the change as well as the process itself. By practicing what they preach, leaders will gain trust and respect from their employees as they drive the change forward.

3. Set expectations
An honest conversation with employees of exactly what will change is essential, whilst having empathy for their personal feelings or circumstances. People prefer to know what to expect so be clear on why the change is taking place and the expected time frame.

4. Actively listen
People need to know you are listening to them and really taking their thoughts into consideration. In so doing you will pick up some very valid points that could help you implement change more smoothly, overcome any issues or even uncover ideas to make the change even more successful.

5. Act on feedback
Once you have taken on board the feedback you must take action and deliver on your promises (or explain why it is not possible to do so). Sometimes the seemingly minor things can make a real difference to people so it is important not to overlook this as it can have an immensely positive impact.

6. Engage and collaborate
When employees feel included in the change process and have an opportunity to participate, it encourages everyone to take ownership. Collaboration can open up immense creativity and a true sense of camaraderie and teamwork that propels everyone through the change, all pulling in the same direction.

7. Identify willing ambassadors
If you have successfully communicated the change and collaborated with your employees it should be easier to attract ambassadors to help drive the change within the organisation. Getting the right people on board who are natural leaders within the team can really impact success and encourage others to get involved as understanding throughout the workforce grows and gains momentum.

8. Build relationships
Business is all about fostering great relationships – and this is really imperative in times of change. Be inclusive, find out what excites and motivates people. Strong relationships help people feel part of the organisation and feel invested in its future.

9. Take a systems approach
As a business grows rapidly, it can often become more complex. This means that frameworks, processes, and systems need to be addressed before the change takes place, along with a plan of how it will be managed. This will help to minimise any impact on performance due to new ways of working and ensure that the change is sustainable in the long term.

10. Value your people
People really are an organisation’s most valuable asset so look for every opportunity to inspire, motivate and make change a positive experience. Think about new ways to reward employees, make small gestures that show you appreciate their input and develop their skills by offering them new projects to work on. Being creative and agile in your approach is the best way of achieving lasting change that yields big results.

January 14

How to meet duty of care responsibilities for employees working abroad.

Responsibilities to protect the health, safety and security of employees working abroad continue to grow in complexity and importance and yet there is a lack of awareness of the full extent of organisations’ duty of care towards business travellers.

Organisations that operate or seek new opportunities in overseas markets will usually experience a higher frequency of travel among employees. Despite the current focus on controlling costs, organisations are forging ahead with essential business travel, often sending employees to unfamiliar locations where they may encounter situations that present increased risk and threats to their health, safety and security.

In the past year, more than 3.5 million international trips were made by employees, a quarter of which were to high or extreme risk destinations. Threats such as terrorism, natural disasters, infectious diseases, crime and political instability increase the risk to the business traveller and therefore the potential liability of the employer. As workforces become increasingly mobile, fulfilling duty of care can seem like an overwhelming task for a business, but it does not have to be. The key to providing adequate duty of care is to demonstrate that steps have been taken to identify and assess all foreseeable risks and negate these through a comprehensive risk management strategy.

Understanding the duty of care responsibilities of the employer
The initial stage of fulfilling duty of care is to become familiar with the travel needs of the employee, the duty of care requirements and the policies and procedures organisations can put in place to ensure these requirements are met. For example, one important requirement is to undertake an assessment of the foreseeable risks associated with a particular location, and to ensure this assessment is credible and documented. The employer should then educate the employee about the environment they are going to and inform them of their responsibilities when travelling on company business.

Senior management and inter-departmental buy-in
Too often, duty of care does not sit neatly within one department in an organisation. The challenge is to understand how departmental responsibilities – such as travel, legal, insurance, procurement, business continuity, occupational health and HR – fit together in order to fulfil duty of care obligations.

Building a strong business case
The next stage is therefore to build a solid business case for justifying the development of an all-encompassing duty of care strategy. The business case can be divided into two categories, the carrot and the stick.
The ‘carrot’ relates to the cost-benefit components of implementing a comprehensive duty of care strategy. The carrot is business continuity, reduced costs for avoidable expenses like medical care, evacuation, productivity loss and damages resulting from liability. In the most simplistic sense, the old adage that prevention is better and less costly than the cure is applicable here. Implementing good risk management strategies also helps to protect the reputation and brand of the organisation for recruitment and retention purposes and to improve employee wellbeing and productivity by avoiding illness or injury.
The ‘stick’ is meeting legal compliance and reducing or avoiding negligence and liability. The UK has developed legislation and derivative case laws that reflect employers’ expanded duty of care responsibilities, and courts are increasingly favouring employees.
Implementing risk management policies and procedures
The final step is to develop a comprehensive travel risk management plan. Acknowledging that it is impossible to predict exactly when crises will occur, the integrated risk management approach to duty of care emphasises the importance of being prepared and having plans in place for when things go wrong. It is essential that all foreseeable risks are assessed, communicated to the employee and incorporated into the risk management strategy.

If an organisation can demonstrate that steps have been taken to assess the risks and inform, update and assist the travelling employee, then it is on the road to fulfilling its duty of care obligations.

November 1

Who owns the LinkedIn contacts . . . employer or employee?

The use of online social networking in the workplace has increased dramatically in recent years, in particular through the use of LinkedIn accounts by employees to maintain lists of contacts made during their working lives. The question is raised as to whether the employer or the employee owns the LinkedIn contact lists that have been created in the course of employment. Further, whether an employer can insist on the return of such contact lists when an employee leaves a company.

Due to the terms and conditions of LinkedIn, ownership of a user account itself (provided it is in an employee’s own name) remains at all times with the employee and an employer cannot force the employee to transfer their account or disclose their username and password to them. The key question is therefore whether a LinkedIn contact list created in the course of employment constitutes ‘confidential information’ (ie. equivalent to a trade secret) and therefore owned by the employer.

Observations by judges in relevant cases suggest that basic data which is in the public domain such as the name of a client company, its head office address and contact telephone number do not amount to the equivalent of trade secrets. However, individuals’ direct dial telephone numbers and email addresses are quite likely to be treated as confidential, protected by the law of confidentiality and may not be disclosed or used by the employee without employer authorisation.

The usual breach of confidentiality occurs towards the end of an employment when an employee prints off or emails to himself a list of the employer’s contacts contained on the employer’s computer systems. The situation with LinkedIn is different because the employee has obtained confidential information in the course of his employment for the purpose of his employment. His employer has permitted him to do this and there is no question that he has obtained the information by any underhand means. If the employer has let the employee have the information can he take it back?

The English courts have already decided that where an employee keeps all his contacts (including his own contacts that pre-existed his employment) in his employer’s Outlook system, backed up on the employer’s server, the Outlook contact list will belong to the employer. However, a LinkedIn account is provided directly to the employee by LinkedIn and is hosted on LinkedIn servers therefore the Outlook case law is not directly applicable. Only one reported English case has touched on the ownership of confidential employer contacts migrated by an employee into LinkedIn.

In this case the Court held that even if the employer had authorised the employee to extract its confidential information and use it on LinkedIn, it had only given such authorisation for the purposes of the employment. By extension the argument follows that, just as with physical address books (or other hard copy lists), the contact details should be handed back to the employer at the end of the employment. In the context of LinkedIn this can only be achieved by the employee deleting the relevant connections from his LinkedIn profile.

Employees believe that the LinkedIn connections form part of their stock of knowledge that they are entitled by law to take with them throughout their career. There is presently no sign that the English courts will agree with this argument though and employers are advised to have up to date social media and confidentiality policies which clearly identify what LinkedIn information belongs to whom. Employees who have managed to build up extensive LinkedIn accounts would be wise to negotiate clear terms relating to their contact network before accepting new offers of employment.

July 22

Zero hours casual contracts are not the only option.

The Government is to review the use of controversial ‘zero-hours’ contracts under which staff are put on standby and not guaranteed a minimum amount of work. The concern is that these contracts are now widely used but relatively little is known about their effect on employers and staff. Whilst it is important that the workforce enjoy flexibility, it is equally important that it is treated fairly.
Staff employed under zero-hours contracts are mainly casual workers rather than employees, and the defining feature generally is the absence of mutuality of obligation. In practice, this means staff can be given extra hours when it’s busy but see their shifts cut to zero when it’s quiet. In most cases staff are expected to be available for work but can legally turn down a shift if they don’t need it.
It also means, given that people employed under zero-hours contracts are usually workers, that these staff enjoy far less rights than if they were employees under a contract of employment; most notably they have no right to a notice period on termination of the contract, nor any protection against unfair dismissal, nor do they enjoy any of the family friendly rights.
While zero-hours contracts are, therefore, at least currently, a legitimate means of providing flexibility, it is important for employers to note that they are not the only option.
Permanent employment contracts can also provide all the flexibility of a zero-hours contract and still give certainty concerning employment status for both parties and offer greater employment rights for the member of staff. The way that this flexibility can be achieved is by including appropriate provisions which could include:
a ‘casual employee clause’ being incorporated within the employment contract
job descriptions being non-contractual to allow for changes
flexibility, mobility and variation clauses being included in the contract itself
A more flexible permanent contract containing these types of provisions means that the member of staff will be an employee, rather than a worker. Thus, as employees, they do then have the same rights and entitlements as permanent members of staff – the only difference is that there are no guarantees on the minimum number of hours’ work that they will be offered.

In today’s economic climate, it isn’t viable for employers to employ all staff on permanent contracts with set hours, and that’s why ‘zero-hours’ contracts have become more popular. As long as the employer has well-managed systems in place to support this type of contract, there is no reason why they can’t work for everyone. Employers also need to be more proactive about communicating the terms and conditions of such contracts at the outset to ensure employees understand their rights and what is expected of them.

June 12

The complexities of annual leave and sickness absence.

As we approach the time of year when most employees may be hoping to take annual leave, it is worth considering the increasingly complex interaction between annual leave entitlement and long term sickness absence. Whilst straightforward, definitive answers would be much appreciated by employers and workers alike, the UK and EU case law in this area is becoming diverse and, regrettably, contradictory.
The European case of Stringer held that if a worker is absent due to ill health he or she will still accrue annual leave. That is a very clear message to employers. However, it is not without complication because it is unclear how much annual leave will accrue. Is it the full 5.6 weeks of paid leave a year (which UK workers enjoy and which equates to 28 days for a full time employee working 5 days a week) or, as per EU legislation, only a 4 week entitlement to paid leave?
Perhaps happily for employers, the courts confirmed that workers on long term sick leave are only entitled to carry over up to 4 weeks’ accrued but untaken holiday entitlement.
The law has further clarified that absent workers are entitled to this accrued but untaken leave regardless of whether or not the worker has asked to take holiday during that period of sick leave. Prior to this, it had been thought that in order to benefit the worker had to have formally requested the holiday – this is now not the case.
A further issue that has been before the courts is the question of when the accrued holiday can be taken by the worker. The options currently open to the employer are:
workers on long term sick leave must be entitled to take (and be paid for) any accrued annual leave during their time on sick leave – although the employer cannot insist that they do
workers absent for less than a year should be encouraged to take their outstanding annual leave on their return to work before the holiday year expires
·if there is insufficient time left in the leave year to enable them to take their accrued leave they should be allowed to carry this leave forward into the next leave year
an indefinite period of carry-over would become financially punitive for an employer but as yet there is no UK authority on how long a worker can carry over annual leave accrued during sickness absence – EU courts have ruled that 15 months after the end of the relevant leave year is reasonable and so it has been deemed safe to assume that sick workers should be allowed to carry over unused annual leave entitlement for a period substantially longer than the reference period in which the holiday accrued.
Employers may only pay workers in lieu of their annual leave entitlement on termination of their contract. It is important to remember that if a worker’s employment ends before having had the opportunity to take the annual leave entitlement due to sickness, the worker is entitled to a payment in lieu at the normal rate of pay for all the accrued leave including that which is carried over.

A further point to note is that if a worker has a prearranged period of annual leave and then falls sick, the worker is allowed to take their annual leave at a later date – even if this involves carrying it over to the following leave year.

However, an employer is entitled to ask for medical evidence of unfitness for work (over and above self-certification) if sickness occurs during a holiday. As it is an unusual situation, employers should make clear this applies regardless of how long the sickness lasts.

As is clearly demonstrated, this is a changeable area of employment law and until we secure further clarification from the national courts a degree of uncertainty will remain in certain areas. In the meantime, to minimise the risk of any challenge, employers need to be able to show that they have taken a reasonable and consistent approach to the various issues around sickness and annual leave set out in this note.

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