Staff on sick leave now entitled to sick pay

In a significant change in employment law, a recent judgment has declared that employees on long-term sick leave are still entitled to all the holiday entitlement they have been accruing on their return to work.

The European Court of Justice ruled this week that "A worker does not lose his right to paid annual leave which he has been unable to exercise because of sickness. He must be compensated for his annual leave not taken".

The judgment means that an employee returning from one year's sick leave will be entitled to the statutory minimum of four weeks paid holiday from the year spent off work as well as to their holiday entitlement for the year ahead.

The ECJ also decided that an employee who leaves their job while on sick leave, whether due to being dismissed or by resigning, will be entitled to a lump sum payment in lieu of the annual leave they have accrued but not taken while they were absent from work (in addition to any notice, redundancy or termination payment).

The decision may also apply retrospectively so employees may be able to claim for holiday payments dating back a number of years if their sickness absence prevented them from taking holiday leave and they have not already claimed benefits from their employer.

Clearly the new ruling will make for disheartening reading for employers and will result in an additional cost for businesses to bear - an unwelcome burden, particularly in the prevailing economic climate.

As a result of the change in the law, employers are advised to review their contracts and policies in respect of sickness absence and holiday entitlement to ensure they are legally compliant and also to attempt to avoid any future expense that may result from a breach of the requirements.

Employers are also reminded that the statutory minimum entitlement for annual leave is increased as of April 2009 from 4.8 weeks to 5.6 weeks (equivalent to 28 days for a five-day working week).

If you are concerned about the new requirements upon employers in regard to holiday entitlement for staff on sick leave or wish to discuss sickness absence or holiday leave in general, please contact Tim Jones, Debra Cottam, Jo Walker or Jayne Holliday at Higgs & Sons on 01384 342100.

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