The Government is currently consulting on proposals to amend the Working Time Regulations to permit the carry-over of annual leave, by those employees who are unable to take it in the year which it accrues due to sickness absence. As things stand, the Working Time Regulations say that any untaken annual leave is lost at the end of the leave year. However there has been some UK case-law that annual leave must be allowed to be carried over where the employee is too sick to take it [see our previous blog post here].
A recent decision at European level may influence the UK Government if it does decide to permit carry-over. Under German law, annual leave could be carried over into the following leave year but would expire 15 months after the end of the leave year in which it was accrued if still untaken. The European Court of Justice has held that this expiry period is lawful on the basis that annual leave taken too long after when it was accrued no longer provides the intended benefit to the employee.
This decision is not authority for individual employers to set their own expiry period for statutory annual leave (although they could do so for contractual entitlement) and to do so would be inconsistent with the Working Time Regulations as presently drafted which do not permit carry-over at all. Such an expiry period, if introduced, may also be of limited practical relevance; comments by the ECJ suggest that a 15 month expiry period will be adopted as the benchmark and most employers will likely have taken steps to address long-term absence before it reaches this point. The area where this issue could have the greatest relevance is for employees on PHI who continue to accrue annual leave even though they are no longer working – they should request to ‘take’ their annual leave in the year in which it accrues to avoid any issue about it expiring.