Court rules employees can now put in holiday pay claims for holiday not carried forward by employers

Do employees have an automatic right to carry forward untaken annual leave at the end of the leave year ?

No, there is no automatic right for employees to carry forward annual leave into the next leave year period.

Can I pay an employee for holiday they have not taken at the end of the leave year ?

No, under the Working Time Directive it is illegal to pay an employee in lieu of any statutory leave not taken at the end of the leave year.

As an employer can I write off leave not taken by employees at the end of the leave year ?

The simple answer to this is yes.

However, a recent landmark court case Smith V Pimlico Plumbers has set a president allowing claims to be brought for annual leave not being carried forward by employers.

What must I do as an employer to avoid claims for not carrying forward annual leave ?

The recent case has very much put the onus / burden of proof onto employers to be able to demonstrate that:

• All employees have been made aware of the company policy in relation to annual leave and not being allowed to carry it over to the following year.
• All employees have been given the opportunity to take annual leave within the current leave period
• They have openly encouraged employees to take and use their leave entitlement before the end of the leave year

If this cannot be clearly demonstrated by an employer, the courts will find that the right to paid leave did not lapse at the end of the leave year, but carriers over and accumulates until termination of the contract.

In the case of Smith V Pimlico Plumbers, Mr. Smith was able to claim for 24 weeks of back / lost holiday entitlement.

Conclusion

Smith V Pimlico Plumbers case has now set a president to allow claims of this nature to be brought by employees, as an employer it is very important that you put in place formal annual leave policies detailing what happens at the end of the leave year, keep records of the companies interactions with employees in relation encouraging them to take their annual leave entitlement before it is lost at the end of the leave year.

If you have not had this in place historically, start now to break the cycle. As failure to do so may result in any claims being backdated to the start of the employees employment.