Holiday pay and carry over

The European Working Time Directive entitles workers to at least 4 weeks’ holiday pay per year. Many countries, including the UK, choose to give workers additional holiday entitlement over and above the minimum. The Working Time Regulations 1998 gives UK employees an additional 1.6 weeks of leave per year. The Court of Justice of the European Union (ECJ) has looked at whether the right to carry over holiday due to sickness applies only to the 4 week entitlement under the Directive.

In TSN v Hyvinvointialan, the ECJ considered two cases involving Finnish law. In each case the employee had been prevented from taking all their leave in the holiday year due to sickness absence. This included holiday entitlement over and above the 4 week minimum. One of the key questions for the ECJ was whether member states could have domestic laws which limited carry over of unused holiday to 4 weeks. The ECJ confirmed that the rules about extra holiday pay over and above the 4 week minimum were controlled by domestic law rather than European law. It is not unlawful to limit carry over of unused holiday to 4 weeks.

This case confirms the position adopted by the EAT in Sood Enterprises v Healey. Unless there is a contractual right which changes the position, carry over will be limited to 4 weeks.