Employees on long-term sick leave will be entitled to take all holiday that they have accrued when they return to work

Small business owners have criticised the House of Lords ruling, which means that someone who had been on sick leave for two years would be entitled to around 40 days of paid holiday on their return.

"Allowing workers to accrue statutory paid holiday entitlement during sickness absence will have serious financial and practical ramifications for employers across the UK," said Tim Marshall, partner and UK head of employment at lawyers DLA Piper.

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