Court ruling on holiday pay "severe blow" to business
A EUROPEAN Court of Justice (ECJ) ruling that employees on long-term sick leave are entitled to take holiday accrued when they return to work is being hailed as a “severe financial blow” to business.
Judges also ruled that if workers are sacked or leave a firm they must receive holiday pay equivalent to the time they were unable to take off while poorly.
It means that an employee off from work for two years could be entitled to a minimum of 40 days leave plus annual holidays.
The case was brought by five staff working for HM Revenue & Customs and a worker for a German insurance firm.
Under the European Working Time Directive, which was adopted in the UK back in 1998, workers have a right to a minimum period of paid annual leave.
Guy Lamb, head of human resources group, for DLA Piper’s Leeds, office said that allowing workers to accrue statutory paid holiday entitlement during sickness absence would have serious financial and practical ramifications for employers across the UK and Europe.
“In these difficult times, further constraints could prove too much for some employers struggling to keep up with existing requirements,” he added.
“The European Court of Justice’s ruling will increase the complexity of managing absence from work by allowing workers to take accrued holiday when they return to work even after many months or more than a year off. Besides the financial burden, this potentially could make integrating an employee back to work and balancing workloads extremely difficult.”
Mr Lamb said that employers would see their own costs soar when deciding to terminate employment as they will be forced to pay workers in lieu of their untaken holidat.
“This will apply even for workers who may have exhausted their contractual right to pay,” he continued.
“As a result of this ruling, UK and European employers will need to carry out a comprehensive review of their sickness, maternity and holiday policies to ensure that they meet the statutory minimum requirements.
“Employers should be careful to specify expressly whether or not contractual holiday that exceeds the statutory minimum continues to accrue during absence.”
