Following a decision by the European Court of Justice, under a new directive which comes into effect this October, any employee who takes annual leave but during that time falls ill will be able to take the days they have off sick as extra holiday entitlement later in the year.

Michael Slade, managing director of Bibby Consulting & Support says companies will be ‘frustrated and disappointed’ that more rights are being given to employees at a time when the government has pledged to reduce red tape and help firms take on new recruits and grow.

As long as the employee can produce a valid sick note, businesses will be obliged to give them the extra time off. The same ruling will also apply to staff who become ill while on maternity or paternity leave. Estimates are that the changes will cost businesses more than £100 million a year.

Slade says, ‘What it means is that employees who are absent from work due to sickness will continue to accrue holiday entitlement during this period. And where they are prevented from taking their full annual leave entitlement during any holiday year because of sickness, they will be entitled to have it carried forward to the following year, regardless of what the company policy is.’

He adds that employers might not want to allow a worker who is off sick to take a holiday, because the employee is off to recover from an illness.

‘Our advice would be to allow holiday entitlement to continue to accrue while the employee is off sick and then let it be taken as paid time off when the employee is fit to return to work. Should the employee cease to work for the business in that period, the time off could be replaced with a payment in lieu,’ adds Slade.