On 20 January 2009 the European Court of Justice ruled on the right of workers to accrue paid statutory holiday under the Working Time Regulations during long term sickness absence. The following are the key points:

  • A worker's entitlement to statutory holiday accrues during long term sickness absence. It is a matter for national law to decide whether a worker can take holiday during sick leave as a principle (the ECJ has referred this point back to the House of Lords).
  • Presumably subject to national law allowing a worker to take holiday when sick, a worker who is on sick leave for the whole of the holiday year, or who worked for part of the holiday year before going on sick leave, has not had the opportunity to exercise their right to paid holiday. Therefore the employee's accrued statutory holiday must be carried over to the next holiday year.
  • Where the worker has not been able to exercise their right to holiday (including any carried over holiday) because the employment relationship ends before they return to work and take their holiday, they must be compensated for the accrued holiday that they were unable to take.

This is an important case for employers to note, as it reverses the current UK law position and because its effect will be to increase the cost to employers of workers on sickness absence. The House of Lords will hopefully hear the case later this year to bring some closure to this area.