Tax & Accounting News

Holiday Rights

04/02/2009

Harris Lipman have highlighted a new European ruling on workers’ holiday rights with significant implications for employers.

In a case brought by five employees at HM Revenue & Customs and one worker at a German pensions and insurance provider, the European Court of Justice (ECJ) ruled on 20 January 2009 that employees on long-term sick leave accrue paid annual holiday during their absence from work and are entitled to take this leave on their return.

The court ruled: "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.”

The ruling also means that staff who have been sacked, or who have left their employer, must receive pay equal to any time they were unable to take as leave while on sickness absence.

The ECJ ruling only applies to the 20 days of annual leave required by law under the European Union Working Time Directive, and not to the UK minimum for paid leave of 24 days that currently applies under the Working Time Regulations. This entitlement will increase to 28 days from 1 April 2009.
The case will now go to the House of Lords make a decision on how the ruling is to be interpreted in the UK, for example whether it should apply only to the 20 days holiday entitlement or to the higher UK entitlement.

The European decision has been criticised by British business leaders. Katja Hall, director of policy at the Confederation of British Industry, said: “Businesses themselves also suffer when staff take sick leave and we had hoped that a compromise could have been achieved over unused holiday time. At a time when the economy is struggling, this judgment will ensure that staff are away from the workplace for longer.”

With no timescale as yet for the House of Lords’ decision, employers need to start thinking about reviewing existing employment policies and contracts to deal with the extra holiday entitlement under the Working Time Regulations and contractual holiday that exceeds statutory requirements.

 

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