Annual Leave: EAT says employees must use it or lose it

The Employment Appeal Tribunal (EAT) has confirmed that workers must comply with their employer’s rules for taking annual leave (or, in an absence of such rules, the notice provisions of the Working Time Regulations).  This is the case even if the worker stands to lose any unused holiday entitlement at the end of the leave year, because they have failed to follow the rules (Lyons v Mitie Security Ltd).

The EAT made it clear that an employee could lose the right to take untaken leave if the rules governing the giving of notice were not followed or if the employer refused the request on other grounds e.g. staffing requirements leaving insufficient time to take the leave before the expiry of the leave year.  However, the EAT cautioned that employers must not operate such rules in “an unreasonable, arbitrary or capricious way so as to deny any entitlement lawfully requested.”

However, it seems likely that this ‘use it or lose it’ approach will not apply to situations when the employee is unable to take their holidays because of ill health (Stringer and others v HM Revenue & Customs /Pereda v Madrid Movilidad SA).  The ECJ has made it clear that sick employees can choose to carry untaken holiday over into a subsequent holiday year and any tribunal considering the question of carry over in the future will need to decide whether they can interpret the WTR to give effect to Stringer/Pereda. 

Similarly, it seems likely that this ‘use it or lose it’ approach will not apply to situations when the employee is unable to take their holidays because of maternity leave.  The judgment of the ECJ in Merino Gomez v Continental Industries del Caucho SA, suggested that it would amount to sex discrimination if a woman were to lose her entitlement to statutory annual leave as a result of going on maternity leave. This suggests that employers have a duty to facilitate the worker taking all her annual leave before she goes on maternity leave or to permit her to carry it over.

Does your business operate a 'use it or lose it' approach to holidays? 

How are you dealing with leave for employees on maternity or long term sick leave?