New Sick Pay Laws

A long running court battle regarding sick pay has been resolved by the House of Lords.  As a result, you should now be aware of the following:

• employees on long-term sick leave continue to accrue statutory holiday entitlement;



• employees must be permitted to take holiday (and be paid holiday pay) during their sickness absence; and



• where an employee was unable to take holiday due to sickness in previous years, they can claim backpay if holiday pay was not paid.

Clearly this could lead to additional costs.  Employees on long-term sick who have used up their sick pay entitlement are now likely to seek holiday pay.

It is unclear whether employees have to notify you of their wish to take holiday while they are on sick leave.  Unfortunately we believe that they do not, although this will no doubt be argued about in coming months.

If you have employees on long-term sick leave you should think about the following:

• by ensuring that employees on long-term sick leave take holiday, you can prevent significant liabilities accruing over time.  However, you may prefer to risk not informing your employees of the recent changes and wait to see if an employee brings a claim.



• consider dismissing employees on long-term sick leave.  However, please be aware that this is not a simple process and care must be taken to avoid unfair dismissal and/or disability discrimination claims.

If you wish to discuss how best to reduce the cost of sick pay and/or holiday pay please contact us.

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