Holiday leave and sickness absence: Double dilemma

We are frequently asked questions about the relationship between holiday pay and sick leave. We thought it would be useful to answer some of the most common holiday and sickness questions.      

Under the Working Time Directive workers are entitled to a minimum of 4 weeks annual leave. Workers in the UK are granted an additional 1.6 weeks leave by virtue of the Working Time Regulations (WTR). The WTR do not allow employees to carry holiday to the next leave year.  Contractual holiday pay is reference to any additional holidays over the minimum 5.6 weeks which workers may have as a result of a contractual agreement with their employers.

Does annual leave accrue during sickness absence?

Yes, statutory annual leave does continue to accrue during sickness absence. 

Can workers on sick leave ‘take’ holiday?

Yes, workers can take statutory annual leave and be paid for it whether or not they have exhausted their right to statutory and/or contractual sick pay.  

What happens if a worker is sick before/during statutory annual leave?

A worker who is sick either before or during a period of annual leave can take that holiday at a later date, if necessary by carrying over the leave to another leave year.

Do workers on long term sick leave have to expressly request that their holidays are carried over?

No, there is no requirement for a worker on long term sick leave to make a carry-over request.

For how long can workers ‘carry over’ holiday entitlement?  

There is a limit to the length of time an employee on long term sick leave can continue to carry over untaken statutory annual leave and it is anticipated that there will be more case law on this point.    In a recent European case, the courts agreed that a limit of 15 months carry over which was part of a collective agreement was compatible with European law. On that basis the worker’s right to accrued holiday pay was limited to 15 months and he was not entitled to holiday pay ‘accrued’ over his six and a half years of absence.

What is the position in relation to contractual holiday entitlement over and above the statutory holiday entitlement?

The answer to this depends on the terms of the employment contract. Employers should make sure that they have clear policies and procedures in place and consider limiting the rights discussed above to statutory holiday only given by the Working Time Directive i.e only 4 weeks.

Are there any further changes in the pipeline?

The government has proposed to amend the WTR to expressly state that, where a worker has been unable to take their annual leave due to sickness absence (or falls sick during scheduled annual leave), and it is not possible to reschedule the leave in the current leave year, they will be able to carry it over into the following leave year. Employers will be able to require employees to take unused leave in the current leave year if there is an opportunity for them to do so or, where there is a business need, to insist that the unused leave is carried forward to the following leave year.

This proposal is limited to the four weeks' annual leave required by the WTD and not to the additional 1.6 weeks' annual leave conferred by the WTR.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.