5 December 2013: Lets say a woman has been on maternity leave from January. The employer’s holiday year runs January to December and the employer says that any holiday entitlement not taken in a particular holiday year is lost. The woman does not plan to return to work the next January, but instead intends to leave. Is she entitled to carry over and take a payment in lieu of all holiday accrued during maternity leave?
The right to statutory paid annual holiday continues to accrue whilst the woman is on maternity leave. She is entitled to take this holiday in addition to her maternity leave (Merino Gómez v Continental Industrias del Caucho SA ECJ 2004 reported at  ICR 1040.
According to the strict wording of the WTR 1998, women on maternity leave may lose some of their holiday entitlement if their leave extends into a new leave year, as the regulations do not permit statutory leave to be carried over into the next leave year. The contract may also limit the carry-over of contractual holiday.
Maternity leave or adoption leave will frequently span two leave years. It is not always possible (or convenient) for the worker to use up their annual leave for the current year before going on maternity leave.
Workers do not have a statutory right to carry statutory holiday forward into the next leave year (regulation 13(9), WTR 1998)). The judgment of the ECJ in Merino Gomez v Continental Industries del Caucho SA  IRLR 407 suggested that it would amount to sex discrimination if a woman were to lose her entitlement to statutory annual leave as a result of going on maternity leave). This suggests that employers have a duty, at least in relation to maternity leave, to allow the worker to take all her annual leave before she goes on maternity leave or to permit her to carry it over.
In Shah v First West Yorkshire Ltd, Leeds employment tribunal – 17/02/10, it was held that an employment tribunal has ruled that employees can carry over annual leave to the next year if they were too ill to take it. Some argue that the decision in Sood Enterprises Ltd v Healy UKEATS/0015/12 on the same point is specific to sickness absence. While the ECJ’s decision in Merino-Gomez v Continental Industries del Caucho SA  IRLR 407, only specifically deals with statutory annual leave entitlement, some argue that employers should apply the principles established to a woman’s additional contractual annual leave entitlement.
This is a grey area as it appears there is no reported UK decision specifically on this point at the time of writing. There will not be a breach of the Working Time Regulations 1998 as regulation 13(9) provides there is no statutory entitlement for a worker to carry holiday forward into the next leave year. However a claim of unlawful discrimination under the Equality Act 2010 may arise.
Reculver Employment Solicitors. Central London: Call today for further advice on maternity law and holiday pay.