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Sickness absence and paid annual leave

Posted on 22nd June 2009
Case law

Employees on long-term sick leave are entitled to take paid leave under the Working Time Regulations.

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Julie Temple Julie
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if sickness absence prevented a worker taking leave the employer must allow them to take it at a later date

Stringer and others v HM Revenue and Customs

The most important aspect of the case relates to an employee's entitlement to be paid annual leave whilst on long-term sick leave, even when the employee has exhausted his or her entitlement to statutory or contractual paid sick pay.

As we reported in February 2009 (Can a sick worker really go on holiday?) the House of Lords referred a number of questions about this issue to the European Court of Justice.

The ECJ decided:

  • workers on sick leave continue to accrue statutory annual leave even though they are not working;
  • workers are entitled to be paid their normal remuneration for accrued annual leave in lieu of taking it on termination of employment;
  • whether a worker can take statutory annual leave during a period of sick leave was a question for national law; and
  • if sickness absence prevented a worker from taking statutory annual leave the employer must allow the worker to take it at a later date, even if this was after the end of the relevant holiday year.
As a result of the above ECJ decision, the HMRC made a concession and (presumably) has agreed to pay the arrears of unpaid annual leave. The unfortunate consequence, however, was that the House of Lords' judgment did not have to deal in any great detail with the questions relating to the extent to which employees on long-term sick leave can enjoy their rights to paid statutory annual leave.

In practice

It is expected employers will incur additional costs because employees on long-term sick leave who have used up their sick pay entitlement will be entitled to paid annual leave under the Working Time Regulations. This may mean that some employers may decide to dismiss such an employee in order to avoid having to pay this additional entitlement. The prudent employer will ensure they obtain appropriate advice first as such decisions may well result in a claim for unfair dismissal or disability discrimination. There may also be issues relating to any income protection insurance (PHI) scheme.

The position appears to be that a worker continues to accrue statutory annual leave even though they are on sick leave and, as the Working Time Regulations do not permit the carry-over of statutory annual leave from one holiday year to the next, workers on long-term sick leave should be allowed to take their paid annual leave entitlement during the period of sick leave.

Read the latest position about holiday and sickness rights at Failure to pay statutory annual leave is a deduction from "wages"Right to defer holiday until after sick leaveSickness during holidaySickness absence and the entitlement to payment on termination of employment for untaken holidayEntitlement to statutory holiday pay is lost if not requested by employee on long-term sick leave and Holidays and sickness absence.

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