Chris Boyle, head of employment at Napthens solicitors, warns that the recent ruling – in the case of HM Revenue and Customs v Stringer and others – means staff can now build up holiday time despite being off work.

Any staff denied holiday pay while on sick leave can now also claim to an employment tribunal for ‘unauthorised deduction from wages.’

This follows a ruling by the European Court of Justice earlier this year that decided workers do accrue holiday pay while on sick leave, and must be allowed to take in on their return, or paid in lieu if their employment comes to an end.

The House of Lords ruling means the European law overrules the UK’s normal Working Time Regulations.

Chris, who advises a wide range of organisation, businesses and employees on employment issues, is warning they will now face higher costs to implement these changes.

For instance, workers should be given an option of declaring part of their sick time as holiday, and receive pay for it – or even to carry over untaken holidays to the next year.

Chris said: “Employers should take note of this ruling and prepare for future periods of absence by staff, which could be more expensive than they are used to.

“The ruling also means that staff will be able to claim for certain back dated unlawful deductions, which could mean a costly bill for companies that haven’t allowed for holiday time to accrue while staff are on sick leave.”