We have recently dismissed someone for gross misconduct. We paid no notice or holiday pay, because there is no need to pay in lieu of accrued holiday. They have appealed against the dismissal and stated that we cannot deduct holiday pay as they have earned it. We believe the law allows us to do this, because their actions broke the contract.
Peter replies:
An employee who is dismissed part way through a holiday year, is entitled to pay in lieu of untaken statutory holiday that has accrued, up to the date of termination, under the formula set out in reg.14(3) of the Working Time Regulations 1998. This applies unless a relevant agreement specifies the sum that will be paid. This is the case even if he or she has been summarily dismissed for gross misconduct. The individual’s contract may, however, specify that any contractual holiday over and above statutory entitlement will be forfeited, if he or she is summarily dismissed.
It used to be that you could withhold holiday pay, but the case of Witley and District Men’s Club v Mackay in 2001 ruled that this was not compatible with the Working Time Regulations. In that case it was written into their rules, but the Employment Appeal Tribunal held that an employee is entitled to be paid in lieu of annual leave accrued, but not taken, at the time their employment ends. They decided that an agreement not to pay the minimum statutory annual leave accrued, under the WTR on the termination of an employee’s contract of employment, was void.
You should therefore hear the appeal and as part of that process confirm that he/she will be paid for statutory holiday entitlement.
Employment Law is not static and often changes, due to judicial rulings like the one above. It is always best to check, or seek advice, before proceeding down a course of action based on previous knowledge, to make sure you are acting in accordance with the current law.
The guidance provided in this article is just that – guidance. Before taking any action make sure that you know what you are doing, or call us for specific advice.
