Sick leave and holiday rights

In January this year, the European Court of Justice handed down a ruling on holiday entitlement during long-term sick leave.

It comes as a real blow, particularly to smaller employers struggling to keep jobs alive during the recession.

The ruling says that employees on long-term sick leave have a right to all the statutory holiday they have accrued. When a worker is off sick, his entitlement to paid holiday continues and he has a right to take the holiday when he returns to work.

This means that a worker who is off sick for two years could be entitled to at least 40 days’ leave, plus public holidays, on his return. This is because, under the ruling, employers must give staff a reasonable chance to take the holiday accumulated during sick leave.

If the employee never returns to work, as often happens in long-term sickness cases, the accrued holiday has to be paid as a lump sum. Regardless of whether the employment has ended because the worker gave notice or whether he was been dismissed, he is entitled to pay in lieu of the holiday he has been unable to take.

The verdict clears up years of dispute over whether accrued holiday rights are lost after prolonged illness. At the same time, it creates financial burdens as well as a range of other potential difficulties for companies.

As things stand, there is not a great deal employers can do to limit potential exposure in this area. However, the judgment related to two joined cases: Stringer (which previously went under the name of Commissioners of Inland Revenue v Ainsworth) and a case brought by a German worker. Stringer is due to return to the House of Lords in the next year or two, meaning some of the issues will be re-addressed.

As always, if you need commercial and pragmatic legal advice, we’re here to help so please get in touch.

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