Employment Law | Sickness And Leave Ruling Potentially Bad News For Employers

A Court of Appeal ruling handed down yesterday could cause employers a financial headache, after it said that workers who cannot take holiday because of illness are entitled to reclaim it in a fresh leave year.

The case centred on NHS clerical worker, Janet Larner, who was dismissed in 2010 without being paid for annual leave she had not taken the year before because she was off sick.

Her union, Unite, took up her case and argued that she had been too ill to make holiday arrangements at that time and so should have been compensated for it in her severance package, even though she had not requested leave or asked for it to be carried over at the time.

And the Court of Appeal agreed, upholding an earlier Employment Appeal Tribunal ruling that Larner was entitled to payment in lieu of outstanding holiday entitlement, regardless of whether she had requested to take the annual leave.

Legal experts are now warning that the ruling could have massive financial implications for employers, many of whom operate a ‘use it or lose it’ policy in an attempt to be able to manage budgets.

It could mean that anyone unfortunate enough to be off sick long-term could return to work with weeks of accrued leave ahead of them, not only causing financial hardship for the company but also resentment from healthy staff, who have not been able to accrue holiday.

Given that the ruling throws up as many questions as answers, lawyers are sure that this will not be the last word on the question and many expect developments in this area.

Legal experts also cited the judgment as the perfect catalyst for the Government to tackle the country’s long-term sickness problem, which costs businesses around £3bn a year.

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Mackrell Turner Garrett Solicitors in London