One of the most confusing areas of employment law in recent years has concerned the impact of sickness absence on employees’ entitlement to statutory holiday and holiday pay.
These issues have been examined at judicial levels from Employment Tribunals to the European Court of Justice. Some key points that have emerged from these cases are set out below:
- Employees on sickness absence during a holiday year do not lose their entitlement to accrue annual leave.
- While on sickness absence, an employee can nominate a period of the sick leave as holiday and should be paid at the full contractual rate.
- An employee on long term sickness absence who does not wish to nominate a period of sick leave as annual leave is entitled to carry the accrued annual leave forward into the next holiday year. However, leave carried forward in these circumstances should be taken within 18 months of the end of the leave year in which it was accrued.
- If prearranged holiday coincides with sick leave the employee should be allowed to take the holiday at another time.
- On termination of employment, an employee is entitled to payment in lieu of accrued holiday that has been carried over, where the carried over leave relates to a holiday year in which they were absent for the entire year due to sickness.