Employees entitled to Holiday Pay during Sick Leave - ECJ Decision

The much anticipated judgement of the European Court of Justice on the issue as to whether workers are entitled to holiday pay during sick leave has been handed down this morning; it is not good news for employers.

The ECJ has held that workers are entitled to statutory holiday pay during sick leave. Where a worker is unable to take their annual leave due to sickness absence (whether absent for an entire year or only part of a year), he or she must be allowed to carry over leave into a subsequent leave year. What’s more, if the worker is dismissed then he or she is entitled to pay in lieu of untaken leave accumulated during sickness absence.

The ECJ drew a distinction between the need for paid annual leave being taken for health and safety reasons and sick leave being taken for the purposes of recuperation; the Court went on to rule that the right to paid leave during periods of sickness is an important part of community social law to which there can be no derogation.

It will be the House of Lords who next decide whether UK properly gives effect to the European Directive and such it is expected that they will overturn the Court of Appeals earlier decision.

This is likely to have massive cost implications for those employing members of staff absent on long term sick as well as those under a PHI scheme.

HR Managers, Directors and Owner Managers should get some expert advice on this new ruling and review and where possible consider redrafting their absence policies to coincide with the new understanding of the law. Interested employers can contact me on gda@hrlegalpartners.com or 01942 252 802.