NHS Leeds v Larner

A worker absent on long-term sick leave throughout a leave year does not lose the right to paid annual leave merely because no request was made to take it or carry it forward. The leave must remain available in a later period when the worker can take it. The “opportunity” principle permits loss only where the worker actually had an opportunity to exercise the right. If employment ends before carried-forward leave can be taken, Article 7 requires an allowance calculated by reference to the worker’s normal remuneration. Domestic rules must be read compatibly with that result. The separate treatment of additional domestic leave under regulation 13A was left undecided.

NHS Leeds appealed from the Employment Appeal Tribunal, which had dismissed its appeal against an Employment Tribunal decision in favour of Mrs Janet Larner. The EAT decision was reported at [2011] IRLR 894 and concerned payment in lieu of annual leave accrued during a period of sickness absence.

Mrs Larner had been absent throughout the 2009/10 leave year, had neither taken annual leave nor requested its carry-forward, and was dismissed shortly afterwards. The central issue was whether a worker prevented by sickness from taking annual leave must make a prior request to carry it forward in order to preserve entitlement to payment in lieu on termination.

1. Appeal dismissed. NHS Leeds had not shown any error of law in the Employment Tribunal’s decision or in the EAT’s dismissal of its appeal.
2. Article 7 of the Working Time Directive had direct effect against NHS Leeds as an emanation of the state. It conferred an entitlement to at least four weeks’ paid annual leave and did not make the existence or exercise of that right conditional on a prior request.
3. The Court of Justice authorities, including Stringer v Revenue & Customs (Case C-520/06), Schultz-Hoff v Deutsche Rentenversicherung Bund (Case C-350/06), Pereda v Madrid Movilidad (Case C-227/08), KHS AG v Schulte (Case C 214/10), Dominguez v Centre Informatique du Centre Ouest Atlantique (Case C-282/10) and Neidel (Case C-337/10), established that a worker prevented by sickness from taking leave does not lose the entitlement at the end of the leave year. The leave must be available in a later period, if necessary in a subsequent leave year.
4. The “opportunity” principle did not assist NHS Leeds. The claimant’s sickness throughout the leave year prevented her from exercising the right to annual leave. The references in Pereda to a request or proposal did not impose a general requirement to request carry-forward. Fraser v Southwest London St George’s Mental Health Trust ([2012] IRLR 100) was distinguishable because the worker there had recovered and had an opportunity to take leave.
5. Regulation 15 of the Working Time Regulations 1998 governed notice of dates on which leave was to be taken. It did not require a worker prevented by sickness from taking leave to make a request for carry-forward. Regulations 13(9) and 14 were to be read compatibly with Article 7 so as to permit carry-forward and payment in lieu on termination. The payment had to reflect the remuneration the worker would have received for taking the leave.
6. The court declined to determine the separate issue concerning additional leave under regulation 13A. That point was raised for the first time on appeal, no relevant findings had been made below, and any observations would probably have been obiter and non-binding.

• Court of Appeal (Civil Division): in NHS Leeds v Larner, [2012] EWCA Civ 1034, dismissed NHS Leeds’s appeal.
• Employment Appeal Tribunal: dismissed NHS Leeds’s appeal from the Employment Tribunal’s decision; the judgment was reported at [2011] IRLR 894.
• Employment Tribunal: held that the claimant was entitled to payment in lieu of annual leave accrued during sickness absence and that NHS Leeds had made unlawful deductions from wages and breached the Working Time Regulations 1998.