In a decision which is set to save Midlands' firms thousands of pounds in employment costs, the Court of Appeal has ruled that workers on long term sick leave are no longer entitled to holiday pay.
According to Tim Lang, partner and head of employment at Black Country law firm George Green, the decision removes a major hassle and expense for employers.
He said: "Common sense has finally prevailed as the Court of Appeal has overturned an Employment Appeal Tribunal decision which ruled that workers absent on long term sick leave are entitled to claim four weeks holiday pay.
"This payment was due to workers who had exhausted their entitlement to contractual and statutory sick pay but who requested holiday.
"Before the Employment Appeal Tribunal made its ruling many employers simply kept workers absent on long term sick leave on their books, as they were not costing them any money."
Mr Lang, who is based in George Green's Cradley Heath offices, went on: "However, once the ruling was made, not only did employers have to pay holiday pay, but if they took steps to dismiss any workers on long term sick leave to avoid this ongoing liability they faced potential unfair dismissal and disability discrimination claims if they got things wrong.
"Employers also had to pay out the statutory minimum notice pay. It is likely that as a result of the Court of Appeal decision employers will be more inclined to keep long term sick employees on their books."
According to Mr Lang, the Court of Appeal based its ruling on the definition of the word "leave", as under the Working Time Regulations of 1998, workers are entitled to four weeks' paid annual leave.
"The Court ruled that it would be contrary to all ordinary usage of the word, for a worker who is off work for a year or more as a result of serious illness to say that during some arbitrarily chosen part of that period he is taking 'leave'.
According to Mr Lang, sick leave is an on-going problem.
" Government statistics show that the number of inactive, long-term sick people of working age has fluctuated between 2.1 and 2.2 million since the late 1990s.
"However, in any one quarter around 200,000 people are absent on temporary sick leave. It is important that employers manage absence for sickness properly to ensure that short term, nonattendance at work does not translate into longer periods.
"While this Court of Appeal ruling will go some way to restoring employers' sense of fairness in Government employment regulations, it is vital that they also actively manage their own workforce.
"Every company should have an absence policy and it must spell out employees' rights and obligations when taking time off from work due to sickness."