Sick pay benefits could be downgraded after ECJ holiday ruling

Employers could be forced to downgrade enhanced sick pay benefits to statutory levels after a European Court of Justice (ECJ) ruling will essentially pave the way for “too many” adults to claim sick days back while on annual leave.


Earlier this month, the ECJ ruled that employees who fall ill while on holiday are entitled to claim back their holiday, even if it means carrying days over into the next leave year. Pereda v Madrid Movilidad SA will essentially mean employers’ sickness absence levels could rise, forcing them to review benefits policies.


Ben Willmott, senior public policy adviser at the Chartered Institute of Personnel and Development, told Personnel Today: “Too many employees may take advantage of this ruling, and employers may take a look at their occupational pay scheme, which is discretionary, and think about possibly changing it so that sick pay taken during annual leave is only paid at the statutory rate.”


He added: “The ruling very much penalises employers that provide good occupational sick pay. If you provide statutory pay, you won’t have a problem because few people will choose to take advantage of it.”


Confusion is also rife among employers, because the Working Time Regulations in the UK state that employees are limited to carrying across just eight days of leave each year.


Katja Hall, director of employment policy at the CBI, said: “It is not clear that the Working Time Regulations require, or even allow, leave to be carried over as the ECJ suggests it should be, so for businesses this will not be straightforward.”


For HR departments, the increased work around providing manpower to cover for those employees that are entitled to more holiday days over the course of a year is a real concern.


Lesley Cotton, group HR director at Paramount Restaurants, explained: “For small businesses where they are running workforces lean and mean, to have something else to stretch it even thinner will be very difficult.”


The opportunity for certain employees to abuse the system and claim non-genuine sickness while on leave is also a problem that HR will have to deal with, said David Yeandle, head of employment policy at the industry body EEF.


He explained: “The concern is that some will abuse the new rules and say they were ill when they weren’t to gain more holiday. Companies will have to try to minimise that possibility as best they can by putting in procedures that make it more difficult to do.”


Separate from the Pereda case, HR departments are also struggling to cope with the ECJ ruling earlier in the year in the Stringer v HMRC case, which ruled that workers can accrue holiday pay while on sick leave, and again that any holiday entitlement should be allowed to be carried forward.


Barry Hoffman, HR director at IT company Computacenter, said: “This is bureaucracy gone mad. Holiday is a break from work. If you’re ill and you’re not at work we are obviously sympathetic, but holiday is intended to be a break from work.”


The ECJ rulings have been criticised by the Conservative Party, with one MP hinting that a Tory government would look to avoid interference from European law.


Conservative MP Jonathan Djanogly said: “It is precisely because of increasing interference in this area by the ECJ that a Conservative government would seek to return social and employment legislation to the UK.”

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