In most cases workers have to take annual leave in the year it is due under the principle that they “use it or lose it” and it cannot be replaced by a payment in lieu except on termination of employment. However, this principle does not apply to workers who are absent from work due to illness.
These workers continue to accrue annual leave, even if they are ill for weeks or even months. If they are not able to take accrued leave in the current leave year, they can carry it over into the next leave year.
However, this is subject to the following restrictions:
1 You only have to allow your worker to accrue up to 4 weeks’ holiday per year in the event of being prevented from taking leave due to sickness - pro-rated for part time staff not their entire contractual allowance unless there is an agreement in place between you and your worker that says otherwise.
2 A worker does not have to ask to take annual leave whilst sick to preserve their right to take it at a later date, or to carry it over to the next leave year.
3 A sick worker can ask to take paid holiday even if s/he is not well enough to go on holiday and is still unwell. If they do, you have to pay them at the appropriate rate.
4 You must assume that if the worker does not ask to take holiday during sick leave it will accrue and, if necessary, be rolled over to the next leave year. This will be the case even if the employee is not sick for the whole of the leave year.
5 A worker who becomes ill either before a period of scheduled leave or during that leave must be allowed to take their holiday at another time – even if this means allowing them to carry the leave over to another year. However, you can insist that your staff provide evidence of their illness such as a fit note or doctor’s certificate to prevent abuse.
6 The right to accrue annual leave does not continue indefinitely and you can impose a “cut off date” of 15 -18 months from the end of the relevant leave year/s in which the holiday accrued for the worker to take this leave. For example:
Dave’s holiday year runs from 1 January to 31 December.
In May 2016, Dave is signed off sick and does not return to work until February 2017. He is entitled to 28 days holiday each year and in the 2016 leave year, he has taken 3 days holiday before his sickness.
Dave is therefore entitled to 17 days leave to be carried over (20 days minus the 3 he has taken). He has to take this by the end of March 2018 (15 months from the end of the 2016 leave year). If he does not request to take this holiday by then, he will lose the right to do so.