Long-term sick entitled to Holiday Pay

Holiday Annual Leave

Employees on long–term sick leave are entitled to take the holiday pay they have accrued when they return to work, the European Court of Justice (ECJ) has ruled.

Holiday Annual Leave

In a decision that clarifies the law after years of uncertainty, the ECJ ruling states that employees must be compensated for annual leave not taken, and will be entitled to four weeks’ holiday pay for each year they are absent from work.

Additionally, employees who have been sacked or have left an employer could be entitled to pay equal to any time they could not take as leave while off sick, on top of any redundancy or termination payment.

The ruling comes as a result of a case brought by a group of HM Revenue & Customs employees who were denied holiday pay after returning from sick leave.

According to employment law firm Peninsula’s head of employment relations, David Price, the decision will mean that somebody who was away from work for two years could be entitled to at least 40 days of paid leave, plus public holidays.

“This is the last thing that many firms need right now. Not only do employers have to deal with the absence itself, but if staff do not return to work, they may have to make a lump sum payout. It’s a cost that many firms, particularly small businesses, simply won’t be able to afford.” said Price.

British Chambers of Commerce director–general David Frost added:

“Businesses will either be left with the burdensome task of reallocating resource while the accrued holiday is being taken, or they will face a large one–off expense which will undoubtedly damage their cashflow.”

The case will now proceed to the House of Lords in the UK for a final hearing, expected to take place later this year, although no further changes to the law are expected.

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