22/01/2009

Employment e-Brief – Holiday rights for the long term sick

In one of our previous e-Briefs we notified you of the case of Stringer and others v. HM Revenue & Customs (formerly Commissioners of Inland Revenue v. Ainsworth) in which the Claimants successfully argued that they were entitled to paid annual leave even though they were absent from work on long term sick leave.

The Inland Revenue appealed against the decision to the Court of Appeal which decided that the right to paid holidays leave did not accrue during periods of sickness absence.

The decision was appealed to the House of Lords, which referred the case to the European Court of Justice (ECJ) for clarification. 

The ECJ has now handed down its judgment and has held that:

  • Workers’ entitlement to annual leave continues to accrue during their sickness absence.
  • A worker who is on sick leave for the whole of an annual leave year is entitled to be paid for the accrued annual leave, despite the fact that they are not at work.  The ECJ ruled that it is for member states to decide whether a worker should be permitted to take annual leave during a period of sick leave, or whether it should be carried over to another year.  Either way, the worker is entitled to be paid at some point.
  • If employment terminates while the worker is still on sick leave, they must be paid in lieu of any remaining annual leave, even if they have been on sick leave for the whole of the leave year.

The case will now return to the House of Lords, which will give a ruling in light of the ECJ’s judgment, no doubt overturning the decision of the Court of Appeal.

This is not good news for employers.  It means that employers will have to allow workers who have been absent due to sickness, further time off work to take their accrued holidays.  Further, where a worker on long-term sick leave is dismissed, the employer will have to ensure that they are paid in lieu of their accrued holidays.

Employers will therefore need to carefully consider the impact of this decision when dealing with workers on long-term sick leave. It is to be hoped that the House of Lords will be able to provide clarification on issues not addressed by the ECJ such as, whether those who have been absent for several years before dismissal, have the right to claim holiday pay for each of those years. We will have to wait and see.

If you require any further advice on this matter, then please contact a member of the Employment team.