Agriculture firms blow as Euro Court extends holiday rights

A leading law firm says agriculture firms face being hit with increased costs following a European Court of Justice ruling to allow workers on long term sick to continue to accrue holiday rights.

Mace & Jones employment law partner Phil Allen said the ruling meant that employees will retain the right to paid annual leave that they have been unable to exercise because of illness.

"This ruling will have far reaching consequences and risks hitting agriculture firms hard," he said. "Employers should review all cases of employees on long term sickness absence, as retaining those employees on the books could cost roughly 8-11 per cent of salary a year, even if they are on nil pay."

Mr Allen said employers concerned by the ruling should seek expert legal advice on dealing with the issue.

"Employers need to handle this issue with care," he said. "Terminating contracts of employees on long term sick is very sensitive and employers are at risk of claims of both unfair dismissal and disability discrimination."

Background

The key points in the judgment are:

• Where an employee is unable to take their annual leave entitlement in any leave year because of sickness absence, they must be allowed to carry it over and cannot lose the accrued leave because of limits placed on the amount of carry over or the period in which it must be taken. This applies where the worker would otherwise be unable to take the leave either because they have not returned from ill health absence before the year end or because there is insufficient time left in the leave year to take their entitlement.

• On termination of employment, a worker must be paid in lieu for all annual leave accrued. Where a worker has not returned from long term ill health absence at the time, they will have had no opportunity to take any of the leave they have accrued and must be paid in lieu of any untaken leave including that accrued in any previous leave years. For example if an individual’s employment is not terminated in case they might be able to come back but they are off sick for 5 years, when their employment terminates/they resign they will be entitled to a "windfall" of approximately half a years pay (possibly) for "accrued annual leave". As a result, employers must carefully consider terminating the employment of long term sick employees, as their remaining an employee will mean they are accruing a right to pay in lieu of annual leave even if their remaining in employment is otherwise apparently cost neutral.