Sickness and holiday entitlement
If an employee’s on long-term sick leave are they still entitled to paid annual leave? What’s the latest on this following a Court of Appeal decision?
Long-term absence. Occasionally, you may find yourself with an employee who’s been absent from work for a long period of time. This is likely to mean that you’ve had to burden other staff with more work, or even pay for temporary workers to cover their duties. Not only this, but since 2002, it became established law that you still had to pay them statutory holiday pay of four weeks.
An unfair decision. This was due to the landmark decision of the Employment Appeal Tribunal (EAT) in Kigass Aero Components v Brown 2002. In this case, the EAT held that an employee on long-term sick leave who’d exhausted sick pay, was still entitled to receive statutory holiday pay under the Working Time Regulations 1998 (WTR). Unsurprisingly, this proved to be very unpopular as it meant that an employee who’d done no work for an entire year, was still entitled to receive four weeks’ holiday at full pay.
Good news. The Court of Appeal in Commissioners of Inland Revenue v Ainsworth 2005 has now overturned this decision. The facts were similar to the Kigass case, but this time the employer chose to fight back (well, it was the Inland Revenue!) The Court held that an employee’s right to the four weeks’ statutory paid holiday doesn’t continue to accrue whilst off on long-term sick leave. This is because the right to take four weeks’ paid holiday under the WTR exists for the health and safety of staff who are working. It doesn’t exist to provide a windfall for an employee sitting around at home.
Act now. Whilst this case refers to an absence of at least a year, it is still to your benefit. Just update your sickness policy to reflect the new state of play. If the situation changes further, we’ll let you know.
Tip. Consider adding the following clause to your policy; “Following legal changes, any employee who is absent on sick leave for at least a year, and who has exhausted company sick pay is no longer legally entitled to receive four weeks’ statutory paid holiday. This takes effect immediately”.
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