Long-Term Sick Leave and Entitlement to Holiday Pay

The European Court of Justice (ECJ) has held in Stringer and ors v HMRC, ECJ case C-350/06 that where a worker is on long term sick leave, he will be entitled to any holiday which accrues during his sickness absence. In addition, the ECJ concluded that on dismissal, the worker will be entitled to pay in lieu of any untaken holiday accumulated during sickness absence.

A worker does not lose his right to paid annual leave which he has been unable to take because of sickness and must be compensated for paid holiday not taken due to long term sickness absence, either by payment in lieu of untaken holiday if he is dismissed or by paid holiday if he returns to work. In addition, a worker on sick leave who has been unable to take annual leave must be allowed to carry that annual leave over. It will be for the national courts to decide whether a worker can take his annual leave during a period of sick leave. The House of Lords will therefore have to determine the position under the Working Time Regulations 1998.

This will not be a popular decision with employers and may indirectly result in employers simply not offering staff long term paid sick leave. The House of Lords, which referred the matter to the ECJ in December 2006, will now present final judgment in accordance with the ECJ decision and will no doubt overturn the Court of Appeal's decision from April 2005 which held that the right to paid holiday leave did not accrue during periods of sickness absence.