Annual Leave During Sickness Absence

Explanatory Note

Dealing with sickness absence is one of the trickiest and most expensive issues for employers to manage. One of the most common questions is what happens to holiday rights when an employee is on sick leave. 

Our suggested additional contract wording offers employers an easy, straightforward method of putting measures in place that will help manage sickness absence cases, particularly long-term cases, and prevent expensive potential liability. We recommend that employers consider including the sample clause below in their contracts. 

Employees on sick leave continue to accrue holiday rights and if they are prevented from taking their holidays because of sickness, they must be allowed to take it following their return to work, even if this means carrying it over to the next leave year. Additionally, where employment is terminated, the employee must be paid in lieu of holidays untaken due to sickness. To help manage this, employers can put a time limit as to how long such leave can be carried forward for. We suggest a time limit of 18 months which corresponds with limits approved by the European Court of Justice (ECJ). The above rules apply to 4 weeks of holiday per year (for a full-time employee), employers can determine their own carryover policy regarding additional holiday.

Sample Additional Contract Clause - Annual Leave During Sickness Absence

Where an employee is unable to take their annual leave entitlement because of sick leave they may carry it over to the next leave year. Any leave carried over from one leave year to the next as a result of this must be taken within 18 months. 

In the event that employment is terminated, The Company will make a payment in lieu of holidays untaken due to sickness up to a maximum of 18 months annual leave accrual.