Sick leave rulings put small firms off hiring new staff

The majority of small and medium sized businesses are wary about hiring new staff following a number of rulings stating that staff on long-term sick leave are entitled to accrue holiday pay, research has revealed.

In recent months, two European Court of Justice decisions (Stringer vs HMRC and Pereda vs Madrid Movilidad SA) and a tribunal ruling (Shah vs First West Yorkshire Ltd) have stated that employees should have been allowed to carry holiday entitlement into the following year when they were too unwell to take it.

In an ICM poll of more than 1,400 small and medium sized businesses, commissioned by the Federation of Small Businesses (FSB), 71% said the rulings would affect their recruitment decisions.

Of those, 38% said they would be more cautious about taking on new staff with health problems, 21% would be less likely to take on new staff, and 17% would be more likely to dismiss staff on long-term sick leave.

Allowing workers to convert annual leave into sick leave, then taking the annual leave at a later date, would have a negative impact on more than half (54%) of the respondents’ businesses, the survey revealed.

John Walker, national chairman of the FSB, said the figures showed that the changes in the law on sick leave were hampering opportunities to get the long-term unemployed back into work.

“The European Commission must look at the measures on sick leave while reviewing the Working Time Directive and ensure these are rewritten so that sick leave is actually classed as sick leave and small firms have the best conditions to take on more staff and help pull the economy back on the road to recovery,” he said.

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