A new European Court of Justice ruling on long-term sick leave will adversely impact small businesses, according to the UK's Federation of Small Businesses.

According to a recent survey commissioned by the FSB, 71% of small companies say that the ruling will affect the decisions they make when recruiting new staff.

The decision, made under the auspices of the Working Time Directive, means that an employee’s right to paid annual leave will continue even when they are on long-term sick leave. This means that an employee can take annual leave whilst they are on sick leave and receive their normal remuneration.

The FSB poll found that as a result of the ruling, 38% of employers would be more cautious about recruiting staff with health problems and 21% would be less likely to recruit new staff at all. 17% said they would be more inclined to dismiss employees who were on long-term sick leave.

The National Chairman of the Federation of Small Businesses, John Walker, commented that:

"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 are hampering small businesses' ability to do the job at hand and help tackle unemployment – which is at its highest for 17 years."

He continued: "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."

This ruling follows the introduction in the United Kngdom of the ‘fit note’, which is supposed to replace the sick note, and which has been broadly welcomed by businesses, but criticised by the medical profession. Under the new regime, GPs are required to sign patients off as fit to work (rather than sick, and therefore unfit to work) where this is the case, specifying which work tasks the patient is able to perform.