Case Study
Even though an employee is on long term sick leave they are still entitled to paid holiday
18/Jun/2009
HMRC v Stringer [2009]
The House of Lords (HL) has finally handed down its decision in the above case. We last reported on this case in February 2009 when the European Court of Justice (ECJ) handed down its judgement. It decided that even though an employee is on long term sick leave they are still entitled to paid holiday. Employees are entitled to be compensated for any holiday they have been unable to take because of a period of sickness absence. HMRC did not contest this appeal.
HL also considered how individuals can enforce their rights to holiday pay. The Court of Appeal had previously held that the only way to bring a claim for holiday pay is under the Working Time Regulations (WTR). This meant that an individual could only claim one year's entitlement at any time.
HL has now overruled this decision and has held that an individual can bring a claim for holiday pay under the Working Time Regulations but also for deduction from wages under the Employment Rights Act 1996 (ERA). The result of this is that the employer has an increased exposure as individuals can claim for all the years they have not received holiday pay. Remember that workers are entitled to annual leave under WTR. This covers employees but may also cover those you currently believe are working for you in a self-employed capacity.
The main recommendations for employers are:
• To review sick pay policies and consider whether these need changing in light of this decision.
• Consider the types of atypical workers engaged by the employer such as independent consultants or casual workers and ensure that proper provision is made for holiday pay. All individuals are entitled to holiday pay unless they are genuinely in business on their own account. Any miscalculation by an employer could prove extremely expensive.
The House of Lords (HL) has finally handed down its decision in the above case. We last reported on this case in February 2009 when the European Court of Justice (ECJ) handed down its judgement. It decided that even though an employee is on long term sick leave they are still entitled to paid holiday. Employees are entitled to be compensated for any holiday they have been unable to take because of a period of sickness absence. HMRC did not contest this appeal.
HL also considered how individuals can enforce their rights to holiday pay. The Court of Appeal had previously held that the only way to bring a claim for holiday pay is under the Working Time Regulations (WTR). This meant that an individual could only claim one year's entitlement at any time.
HL has now overruled this decision and has held that an individual can bring a claim for holiday pay under the Working Time Regulations but also for deduction from wages under the Employment Rights Act 1996 (ERA). The result of this is that the employer has an increased exposure as individuals can claim for all the years they have not received holiday pay. Remember that workers are entitled to annual leave under WTR. This covers employees but may also cover those you currently believe are working for you in a self-employed capacity.
The main recommendations for employers are:
• To review sick pay policies and consider whether these need changing in light of this decision.
• Consider the types of atypical workers engaged by the employer such as independent consultants or casual workers and ensure that proper provision is made for holiday pay. All individuals are entitled to holiday pay unless they are genuinely in business on their own account. Any miscalculation by an employer could prove extremely expensive.
