01/10 Holiday entitlement - some good news for employers

Employment update email

Following the recent cases in which the courts have seemed to indicate that an employee's right to paid holiday is entirely sacred and cannot be interfered with under any circumstances, finally, there has been some good news for employers.

In the case of Lyons v Mitie Security, the Employment Appeal Tribunal held that statutory or contractual requirements to give notice prior to taking leave could reasonably result in an employee losing the right to leave if it is not taken before the end of the holiday year. In other words, an employer is entitled to prevent an employee taking paid leave towards the end of the holiday year even if in doing so the employee is prevented from taking that holiday at all.

Mr Lyons made a request, late in the leave year, to take 9 days holiday. His employer did not allow him to take that holiday because it was not convenient for the business at that time and refused to pay him in lieu. There was no right to roll holiday over to the next year and Mr Lyons therefore lost his holiday entitlement and brought a claim for breach of the Working Time Regulations 1998. The EAT found that employers are entitled to refuse holiday requests even if that results in the loss of holiday and has remitted the case back to the Employment Tribunal to consider whether the employer here operated its contractual holiday request system properly.

By way of example, take an employer whose holiday year ends on 31 December and who does not allow employees to roll any holiday entitlement over from one year to the next. If an employee makes a holiday request on 15 December for the rest of the year off, the employer can validly refuse that request if it is not convenient for the employee to take holiday at that time, even if that results in the employee losing that entitlement altogether.

In practice, employers should treat this decision with some care. The EAT were clear that employers must not operate their right to refuse holiday requests unfairly or capriciously. Any attempt to prevent employees from taking holiday altogether in reliance on this case is unlikely to go down well with Tribunals. However, provided you have a legitimate reason to refuse a holiday request, it will be lawful to do so, even if the employee loses the holiday as a result.