press release
House of Lords deal employers major blow over holiday pay for long term sick
10 June 2009
The House of Lords has today ruled that employees can accrue
statutory holiday pay while off sick. Employees who are denied
holiday pay while on sick leave can make a claim to an employment
tribunal for unauthorised deduction from wages for unpaid sick pay
stretching back over a number of years.
The case (Stringer and others v HM Revenue and Customs) was
brought by five employees at Her Majesty's Revenue and Customs who
had argued that under European law they were entitled to holiday
time whilst they were unable to work due to illness.
The UK workers brought the case under the Working Time
Directive, which stipulates, under Article 7, a right to a minimum
period of paid annual leave. The Working Time Directive was first
adopted at an EU level in 1993; the UK implemented it in 1998.
The Court of Appeal had originally held that employees on sick
leave did not accrue annual leave during the time they were not
working. However, the European Court of Justice (ECJ) had ruled in
January that employees on long term sick leave still accrue
entitlement to holiday.
Dawn Lobley, employment lawyer at Browne Jacobson, said :
“When many businesses are being crippled by the financial crisis
the last thing employers needed was a ruling that adds statutory
holiday entitlement to the existing costs relating to employees on
long term sickness. It is a cost that frankly many employers can
ill afford.
“The ruling may encourage employers to be less tolerant of
employees on long-term sick leave. It may force some employers to
review their long term sick arrangements not to mention the undue
pressure it places on HR departments who will now have to consider
whether to review their policies and contracts.
“Employers may want to consider expressly allowing employees to
take their holiday entitlement during sickness absence. If this
approach is adopted, an employee’s sickness absence would not
prevent them from taking annual leave and avoid the build up of
large amounts of accrued holiday entitlement when they return.”