Employees have the right to accrue holiday while on sick leave, the House of Lords has ruled
Workers on sick leave are entitled to accrue statutory holiday pay, the law lords have ruled.
In HMRC v Stringer and others [2009] UKHL 31 five law lords interpreted the Working Time Directive 1998 to mean that workers on sick leave are also entitled to carry over unused holiday entitlement from one year to the next, and receive pay in lieu of any unused holiday entitlement at the end of their employment.
The unanimous House of Lords’ decision last week is consistent with the European Court of Justice’s ruling on the case, in January.
Rachel Dineley, head of the diversity and discrimination unit at Beachcroft LLP, says the decision “may cost employers dearly”.
“Employers will need to assess the prospective liabilities they may have in respect of employees on long-term sick leave and the risks they now face of claims. This is far easier said than done,” she says. “The House of Lords has left a number of key questions unanswered. Only further case law will resolve some of these issues, which have been ongoing for several years already.”
Dineley warned against the temptation for some employers to resort to dismissing those on long-term sickness absence sooner rather than later, in order to limit those liabilities.
“There are very clear drawbacks in such an approach, not least being the requirements of the Disability Discrimination Act (and the proposed changes arising under the Equality Bill). Employers and insurers who provide income protection will wish to review the nature and extent of their cover in light of today’s decision.
“Whatever action they take, employers must be careful to follow the correct procedure or they could be faced with claims for unfair dismissal, disability discrimination and for loss of income protection benefits for their staff”.
