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New ruling clarifies situation on holiday entitlement and complying with employer's policies

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Employees must comply with employers' rules for annual leave or lose their holiday, according to a new ruling from the Employment Appeals Tribunal (EAT).

The EAT handed out a judgment that provides some much-needed clarification for employers on holiday entitlement and long-standing conflicting cases about whether workers are entitled to holiday pay even when they haven't complied with an employer's rules for taking holidays.

The case of Lyons vs Mitie involved a claim for holiday pay from an employee whose request to take annual leave did not comply with notice requirements set out in his employment contract. The claimant's employment contract stated all applications for holiday must be made on a holiday request form and that the form ‘wherever possible should be submitted at least four weeks prior to the commencement of the holiday' and ‘applications for holidays at shorter notice will be considered on their merits and subject to staffing requirements'.

Shortly before the holiday year-end, the claimant asked to take his outstanding holiday entitlement, although he did not comply with the four-week notice requirement. The holiday request was refused but the employee argued the notice requirements set out in the contract effectively prevented him taking his full entitlement before the year-end. He subsequently resigned.

But Owen Warnock, partner at international law firm Eversheds, said: "The law regarding whether or not workers are entitled to holiday under the Working Time Regulations even when they haven't complied with an employer's notice rules has been unclear.

"This decision brings some welcome clarity to the issue and confirms that a worker must give the notice required by his contract in order to benefit from the rights under the Regulations. The Appeal Tribunal cautioned employers that they must not apply their rules in such a way as to effectively defeat a worker's entitlement to annual leave in any given year. In addition, if an employee is forced into applying for holiday late in the year because of sickness, European law may well require the employer to permit him or her to take the leave.

"But for the majority of employees the moral of this tale is ‘Use it  - and comply with your employer's holiday rules - or Lose it'."