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Sickness and holiday entitlement

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It is important for employers to consider the effect sickness absence may have on an employee’s holiday entitlement.  This can be more complex than it may seem on initial analysis. It is now accepted that an employee cannot be forced to take holiday during sick leave.

Things however become more complex where employees on sick leave have the right to accrued paid holiday while they are off sick, even if for lengthy periods of a year or more. The employer could face huge liability where an employee has been on long-term sick leave and have holiday carried over. The employee could then seek payment of untaken holidays on termination meaning the employer may then have a lump sum of holiday accrued pay to cover.

Employers should consider the alternatives to prevent a claim for several years’ accrued holiday rights in a long-term illness absence. An employer could either cap carry over rights under the terms of a company holiday policy and/or adopt a practice of writing to employees on long-term sick leave, inviting them to take a period of paid holiday whilst remaining on sick leave. In Fraser v South West London St George’s Mental Health Trust it was ruled that employees on long-term sick leave may either take their holiday whilst off sick during that leave year or, if they wish to defer holiday to a subsequent leave year, they must ask to roll it over.  If the employees do not take it or ask to roll it over, the holiday entitlement will be lost.