FSB: New rules on long-term sick leave prevent small firms from hiring
New rules on long-term sick leave are preventing almost three-quarters of small businesses from employing new staff, figures from an FSB-ICM poll show.
A European Court of Justice ruling under the Working Time Directive means that statutory entitlement to paid annual leave will continue during long-term sick leave. The FSB-ICM poll of more than 1,400 respondents shows that the ruling will affect the way 71 per cent of businesses employ.
Of those, 38 per cent will be more cautious about taking on new staff with health problems, 21 per cent will be less likely to take on new staff and 17 per cent will be more likely to dismiss staff on long-term sick leave. At a time of already high unemployment, the Federation of Small Businesses (FSB) is concerned that this ruling is having a detrimental effect on employment in small firms.
The figures also show that a different ruling, also under the Working Time Directive – to allow workers to convert annual leave into sick leave, taking the annual leave at a later date – will have a negative impact on over half (54%) of the respondent’s businesses.
As the debate on the Working Time Directive reopens this autumn, the FSB is urging the European Commission to review these Court rulings to ensure the law is rewritten to reverse these decisions. This will encourage small firms to take on more staff and help bring the country further onto the road to recovery.
Small firms understand the importance for good health in the workplace and the FSB is calling for more advertisement of the Fit Note which replaces the sick note. The Fit Note – which aims to focus on what an employee can do at work – will help get employees back to work sooner. This will help ease staff on long-term sick leave back into work and will give small business owners more incentive to keep hold of their invaluable staff.
John Walker, National Chairman, Federation of Small Businesses, said:
“It is well known that small firms are the country’s key employers and have done all they can to retain their employees and take on new staff throughout the recession. However, measures put in place by the European Court of Justice on sick leave is hampering small businesses’ ability to do the job at hand and help tackle unemployment – which is at its highest for 17 years.
“Small businesses understand the need for good health in the workplace and are like a family, knowing and understanding the needs of their staff. But these FSB-ICM figures show that the changes in the law on sick leave are hampering employment opportunities to get 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 so that small firms have the best conditions to take on more staff and help pull the economy back onto the road to recovery.”
ENDS
Notes to Editors
The FSB is the UK’s leading business organisation with over 213,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk
The FSB-ICM ‘Voice of Small Business’ March Survey was conducted between 18 and 31 March 2010. The results are based on an online survey of 1,418 respondents of the FSB-ICM panel. The research was conducted by ICM Research and Guided Insight.
To view the results, please go to www.fsb.org.uk
In the two cases of Stringer and Pereda, the European Court of Justice (ECJ) ruled on the interaction of sick leave and paid annual leave under the Working Time Directive.
As a result of the ECJ ruling in Stringer:
1) Statutory entitlement to paid annual leave continues to accrue during sick leave, even if the employee is on sick leave for the whole year and does no work.
2) Workers can take their statutory annual leave at the same time as sick leave and receive their normal rate of pay.
3) Payments in lieu of leave upon termination of employment must include any untaken statutory annual leave even if the employee has been on sick leave for the whole of the leave year.
The Stringer case then returned to the House of Lords. The practical effect of its judgment is that a worker may be able to make a holiday pay claim under the deduction from wages provisions of the Employment Rights Act 1996, not just under the Working Time Regulations 1998.
In the case of Pereda the ECJ ruled that where a worker fell sick shortly before pre-arranged annual leave, the worker can request to take the period of annual leave which overlapped with sickness as annual leave at a later date. The ECJ ruled that a worker who has been on sick leave for the whole or part of the leave year and has not had the opportunity to take the leave, must be allowed to carry-over that leave into the next leave year.
The combined effect of the rulings is that a worker can chose to take their statutory annual leave at the same time as sick leave, or the worker can chose to take the missed annual leave at a later date. A worker who has missed out on statutory annual leave due to sickness, may be able to carry-over the missed leave to the next leave year.
For more information on the Working Time Directive, please go to www.businesslink.gov.uk
The Department for Work and Pensions (DWP) has reformed the current medical statement – the sick note – to ensure that individuals and their employers are better informed about when and how it is appropriate to support someone back to work. The FSB has long supported the Fit Note and has worked closely with the DWP to ensure the Fit Note works for small businesses and to help write the guidance. For more information, go to www.dwp.gov.uk/fitnote/
Contacts
Stephen Alambritis: 020 7592 8112/ 07788 422155
Eric Beech: 020 7592 8128/ 07917 628998
eric.beech@fsb.org.uk
Prue Watson: 020 7592 8121/ 07825 125695
prue.watson@fsb.org.uk
Sara Lee: 020 7592 8113/ 07595 067068
sara.lee@fsb.org.uk
