Lords' sickness absence ruling provides little comfort and less certainty

Their Lordships were considering the case following a judgment of the European Court of Justice (ECJ) earlier this year, in which it was decided that workers absent on sick leave accrue the right to paid annual leave during sickness absence and that any worker who is absent for the whole or part of a leave year - and so who does not have the opportunity to take their leave - should not forfeit their right to paid annual leave at the end of the leave year. If they have not been able to take their leave due to sickness absence, they must be allowed to carry their leave over to the next leave year.

The ECJ also ruled that where employment ends, a worker is entitled to a payment in lieu of accrued but untaken leave, at his or her normal rate of remuneration. The House of Lords has now ruled that a claim is not restricted to the current or most recent leave year. Instead, a claim of unlawful deductions from wages can be brought in order to recover arrears of holiday pay, for example, where an individual has been absent on sick leave spanning more than one annual leave year. This could prove costly for employers that have failed to proactively manage sickness absence.

Further bad news comes in the lack of guidance from the Law Lords on the issue of whether or not annual leave and sick leave can be taken concurrently and therefore whether employers can serve notice on workers to take annual leave while on sick leave. The ECJ said there is no reason why the two types of leave cannot be taken at the same time but that it should be up to the laws of each individual member state to say whether that is allowed or not.

There is no express ban in the Working Time Regulations against annual leave being taken while on sick leave and their Lordships were silent on this issue. As a consequence, we may now need to await further developments from the new Department of Business, Innovation and Skills, as to whether the Working Time Regulations will be amended as a consequence of the ECJ's judgment.

In light of the Stringer case and the additional liabilities it will bring for employers, processes for the management of long-term absence situations should be reviewed. Employers should also bear in mind Government research, which has found that after six months off work there is only a 50% chance of returning. After 12 months this falls further to 25% and, after two years off, the chance of return is practically nil. The aim of a good absence management policy should be to avoid absence reaching these levels in the first place. But, if they do, appropriate ways of getting the person back into the workplace should be sought, for example, redeployment or phased return.

Roger Tynan is a partner in the employment pensions and benefits team at Maclay Murray & Spens