Payments on termination
The Employment Appeal Tribunal has held that a worker absent for the whole leave year, but who does not submit a request for the annual leave before the leave year ends, does not forfeit his or her entitlement to paid annual leave.
The Employment Appeal Tribunal has held that the tribunal was correct to find that a termination payment labelled as "ex gratia" was not pay in lieu of notice.
The Court of Appeal has held that an employee's contract of employment was terminated by the transfer of pay in lieu of notice into his bank account, even though he did not know at the time that this had happened.
Helen Samuel, associate solicitor and Anna Bridges, associate solicitor, at Addleshaw Goddard, detail the latest rulings.
In HM Revenue and Customs v Stringer and others sub nom Commissioners of Inland Revenue v Ainsworth and others [2009] IRLR 677 HL, the House of Lords held that a claim for unpaid holiday due under the Working Time Regulations 1998 can be brought as an unlawful deductions from wages claim under ss.13 and 23 of the Employment Rights Act 1996.
In Schultz-Hoff v Deutsche Rentenversicherung Bund; Stringer and others v Her Majesty's Revenue and Customs Cases C-350/06 and C-520/06 ECJ, the ECJ has held that the Working Time Directive allows member states to prevent workers from taking annual leave during periods of sickness, provided that they are permitted to take it at some other time. If sickness prevents a worker from taking his or her annual leave entitlement, it must be carried over into the next leave year. Workers whose employment is terminated cannot have their payment in lieu of annual leave reduced on account of a period of sickness prior to the dismissal.
In Morrish v NTL Group Ltd [2007] CSIH 56 CS, the Court of Session has held that a pay in lieu of notice clause could not be implied into a contract of employment.
In Burlo v Langley and another [2006] EWCA Civ 1778 the Court of Appeal holds that an employee's compensation for lack of notice was restricted to her actual loss where she would have been in receipt of statutory sick pay during the notice period.
In Commissioners of Inland Revenue v Ainsworth and others, the Court of Appeal holds that workers absent through long-term sick leave who have exhausted their entitlement to sick pay are not entitled to four weeks' holiday pay when they have done no work during the leave year.
In Scotts Company (UK) Ltd v Budd, the EAT holds that an employee who had exhausted his contractual entitlement to sick pay, and had remained on unpaid sick leave for a year before he was dismissed, was not entitled to a week's pay for each week of his statutory minimum notice period.
Employment law cases: HR and legal information and guidance relating to payments on termination.