ECJ ruling ends dispute over holidays on long term sick
February 3, 2009
The European Court of Justice (ECJ) made a ruling at the end of last month that will end years of debate over whether staff who are on long term sickness absence should continue to accrue holidays and then be entitled to them at the end of their sick leave.
The right to a minimum amount of paid leave (which will increase to 20 days plus bank holidays in April) is part of the Working Time Directive (1998), and the ECJ ruling found that this right remains even when the employee has been absent through sickness for a long time:
“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”
This news has been taken badly by many employers and business groups, because of the added expense this ruling is likely to mean, especially in the current economic circumstances. It means that an employee will be entitled to take the accrued annual leave after the end of their sick leave, no matter how long this period is – which will mean issues with providing cover for extended leave requests and effectively integrating the employee back into work. In many cases employees on long term sickness absence do not return to work at all, and in this case the employee would be entitled to a lump sum payment of their outstanding accrued holidays when their employment is eventually terminated.
What this means for HR departments is that they will need to review their policies and handbooks to ensure the new rules are incorporated into the wording. Many current policies will give a maximum length of sick leave during which an employee may accrue annual leave (e.g. 6 or 12 months) and this will therefore need to be taken out. Many companies have a policy that states that employees on long term sick will continue to accrue the statutory minimum amount of holidays, but will not be entitled to accrue their additional company holidays (if they have an enhanced number of days) after a certain period. It is my understanding that this type of policy will still be legal after the ECJ ruling – as long as the employee accrues the legal minimum amount of holidays whilst they are on long term sick. It might therefore be prudent to add this into the policy when changing it, so that the company is not liable to pay even more annual leave that has been accrued by the employee if they are entitled to an enhanced amount of days when they are in work.
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