A recent ruling from the European Court of Justice which allows employees to claim back time if they are sick while on holiday, risks forcing good employers in Shropshire and the Border Counties to abandon generous occupational sickness schemes warns a local HR consultancy.

Shropshire-based Triangle HR is urging businesses in the region to clarify their absence management policies to avoid unscrupulous employees taking advantage of the ruling by self-certifying exaggerated or fabricated illness in order to gain back their holiday entitlement for use at a later date.

"It's a worrying ruling for business owners" explained Justine Vaughan, Founder and Director of Triangle HR. "Many employers in the area operate sickness and absence schemes which are quite generous, but this may well make them think again and encourage them to revert to basic statutory sick pay so it could be bad news for employees too."

"I have real sympathy with businesses who are struggling to understand why they should be forced to award compensation in the form of extra holiday to employees who suffer from a cold or tummy bug while away. Many of my clients feel that they take on the risk of employees being sick during their time at work, so it's only fair that employees assume some of that responsibility during their own time, and it's hard to argue with them."

"Businesses have had a tough enough time fighting through the economic downturn, and this ruling has come just as we are starting to see green shoots of recovery" Justine added. "But we're pushing the message that if this is planned for properly then it doesn't need to be a major issue or threaten financial health. It's just a case of understanding your potential liability and ensuring you have the right processes in place to manage" she concluded.

The case is likely to go before the House of Lords a little later this year for a last review, but it could pass into law with few changes so employers need to act now to prepare. "Not only does this affect current employees, but in theory it could be extended back over ten years to when the Working Time Directive was first introduced, which can have huge implications for SMEs across the region" Justine explained.

Employees would be entitled to accrue holiday pay while they're on sick leave and if their sickness and absence meant they hadn't been able to take their holiday, and if they hadn't already claimed benefits from their employer, they are likely to be able to carry that forward to a new year. This even applies if employees are sacked or leave the firm, when they must receive holiday pay equivalent to the time that they were off.

"Even if employees never return to work, as can happen with some long term sickness cases, the company has to pay them a lump sum on the termination of their employment" explained Justine "and without proper planning that can leave a sizeable hole in a business' cashflow".

"The only light at the end of the tunnel for employers so far has been the direction from the ECJ that staff away on long term sickness can't automatically benefit from annual paid leave while away from work, however this will all be clarified once the House of Lords hears the case" explained Justine.

"Employers need to consider their current provision for staff members who have been on long term sick leave, and give some thought to past employees too. They also need to make their employees understand that if they are sick while on holiday they'll need to call their line manager every day while they're ill to confirm that they're still not fit for work.  I'm happy to speak with anyone who is concerned about how the ruling might affect their business and will be advising clients more specifically once the final ruling is confirmed" she concluded.