On the 6th of June the House of Lords gave its long-awaited judgment in the Stringer v HM Revenue & Custom case. This was needed after the European Court of Justice ruling which held, earlier this year, that employees on long-term sick leave do accrue holiday and are entitled to be paid for that holiday if their employment terminates. However, some big questions remained and the case was referred back to the UK Court where it was hoped these would be resolved.

Some hope. The case concerned two categories of worker. One was an individual on indefinite sick leave who asked to take a number of days' paid annual leave. The others were dismissed while they were on long-term sick leave. Since they had not taken their paid annual leave during the relevant leave year, they claimed payment in lieu.

The House of Lords have confirmed that employees on long-term sick leave do accrue holiday and are entitled to be paid for that holiday if their employment terminates.

Unfortunately, the rest of the House of Lords' decision focused on a very narrow issue; can an employee who has not received payment in lieu of accrued but untaken holiday on the termination of their employment bring an unlawful deduction from wages claim or do they have to bring a claim under the Working Time Regulations 1998? The answer, apparently, is that both apply. Workers on long-term sick leave can recover holiday pay not only under the Working Time Regulations 1998 (WTR) but also as an unlawful deduction from their wages under the Employment Rights Act 1996. This has raised the opportunity for workers on sick leave to claim holiday pay going back years - the only stipulation being that the outstanding payments need to be part of a series of deductions, with the most recent being no more than three months old.

As bad, the Lords didn’t make it clear as to whether a worker who has returned from a period of sickness absence is entitled to carry forward any accrued but untaken holiday. The ECJ said this should be the case, but this contradicts the Working Time Regulations which say that all workers must use their holiday entitlement within the holiday year or lose it. So until the Working Time Regulations are changed employers have to choose which law they want to break.