Employees who take 'family leave' may not always given the opportunity to take accrued holiday when they return. But is this legal?
Family Leave encompasses several leave entitlements: maternity, paternity, adoption and shared parental leave. In some cases employees who have been absent on such leave are not permitted by their employer to take holidays which accrued to them on their return. Sometimes this is because their employer does not want to 'offer' this to an employee who has just been off work for a lengthy period of time, other times it is because the employer does not realise that employees have a legal right to this holiday. Either way, failure to allow employees to accrue and take holiday on their return could result in the employee succeeding in a discrimination claim against the employer, which is neither great for the company's bank balance, nor its reputation.
What is the right?
All contractual terms (except for the right to be paid salary/wages) continue during family leave and this includes the accrual of annual leave.
The leading European case on this issue is Merino Gomez v Continental Industries del Caucho SA. In this case the European Court of Justice found that an employee on maternity leave could not take annual leave during her maternity leave and must be given the opportunity to take this at another time. This right also extended to any period of annual leave which was a fixed annual shutdown for the whole workforce.
The right can therefore be summarised as follows: an employee accrues holiday during a period of family leave as if they were at work and, as they will not be able to take the holiday during the period of family leave, they should be given the opportunity to take this at another time.
How much holiday will an employee on family leave accrue?
The starting point is the employee's contract. This should state the employee's up to date holiday entitlement. For example, if an employee is contractually entitled to 25 days' paid holiday per year plus paid holiday on the 8 usual bank/public holidays and that employee is on family leave for 12 months, they will have accrued 33 days' paid leave at the end of that period. If the employee has had 6 months' Family Leave they will have accrued 12.5 days normal holiday plus however many bank/public holidays fell during their period of family leave.
When can an employee take this holiday?
Where an employee's period of family leave spans two holiday years, there will be two issues to consider. Firstly, annual leave accrued in the holiday year in which family leave commenced and secondly, annual leave accrued in the holiday year in which family leave came to an end.
In relation to the former, employers can encourage employees to 'tag' this holiday onto the beginning or end of their period of family leave. Employers should be cautious about forcing an employee to take the holiday before starting their period of family leave but employers can take a fairly hard line with requiring employees to take any such leave at the end of their family leave period, if their usual rule is 'no carry over'.
In relation to the latter, employers can encourage employees to tag any holiday accrued during the family leave period onto the end of the family leave but an employer who starts to 'require' this is crossing the discrimination line and therefore leaving themselves open to a potential claim.
An employee who has been on family leave with no or little pay for a period of time may be keen to transfer from family leave to holiday as soon as possible, to ease any financial strain. Offering this option to an employee may be a good solution for both parties as the employer would have to allow the employee to take this holiday anyway. It is a good idea for the parties to discuss holiday before the family leave period commences and agree how it will be taken.
Are there different rules for statutory and contractual holiday?
Yes, the rules are slightly different for statutory holiday (the 28 days which an employee is entitled to under the Working Time Regulations 1998) and any additional contractual holiday which the employee is given under their contract of employment.
The Merino Gomez case above only considered statutory holiday. Therefore if an employee is entitled to 28 days' holiday (inclusive of bank/public holidays) each year, they must be given the opportunity to take all holiday accrued during a period of Family Leave at another time.
If an employee is entitled to more than 28 days' holiday per year, the rules in relation to the additional holiday (over and above the first 28 days) are less clear. Some may consider that the rules laid down in Merino Gomez only apply to an employee's statutory holiday entitlement and an employer can therefore decide whether or not to allow an employee to carry over any additional contractual entitlement above the first 28 days. However, rules relating specifically to additional contractual holiday have not been tested in a court or tribunal and there is therefore no definitive answer. It is however likely that the rules laid down in Merino Gomez would apply to all contractual holiday. This is because UK law specifically provides that all contractual rights (save for remuneration) continue during maternity leave and the legislation allows employees, who have been deprived of a benefit solely because they have taken a period of family leave, to bring and succeed in a discrimination claim.
Can an employee be paid in lieu of this holiday entitlement?
Not unless the employee's employment is terminating at the end of their period of family leave. UK law only allows employees to be paid in lieu of any holiday which has accrued to them (but which they have not had the chance to take) on the termination of their employment. If therefore the employee's employment is continuing following the period of family leave they should be given the opportunity to take their accrued holiday.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.