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What happens to holiday entitlement when an employee is off sick?
Adrian Fryer
In most cases, employees continue to accrue statutory holiday entitlement while on sick leave, even if they are off work for long periods.
The general rule (most employees)
For workers with regular hours and year-round contracts:
- Holiday continues to build up during sickness absence
- If the employee is unable to take holiday because they are sick, they are entitled to carry over up to four weeks’ leave into the next leave year
However, it’s important to note:
- The right to carry over only applies to the four weeks’ leave under Regulation 13 of the Working Time Regulations
- It does not apply to the additional 1.6 weeks under Regulation 13A, unless the employer allows this by contract
- Workers must take carried-over leave within 18 months of end of year it has been carried-over from
So, in practice, only 4 weeks per year can be carried forward automatically.
Part-year and irregular hours workers (Regulation 15B WTR)
For part-year workers and those with irregular hours – whose holiday entitlement is now calculated based on hours worked under Regulation 15B Working Time Regulations 1998:
- Holiday accrues as a percentage of hours actually worked. This accrual is calculated by reference to an annual holiday entitlement of 5.6 weeks. There is no differentiation into 4 weeks and the additional 1.6 weeks like there is for other workers.
- Irregular hours workers and part-year workers on sick leave continue to accrue annual leave whilst they are off under a calculation set out in the regulations. This works by calculating 12.07% of the average hours worked in the 52 weeks prior to the absence on sick leave (including any weeks where no work was done but excluding any weeks where the worker was on sick leave or statutory leave).
- This accrued leave can be carried over if the employee is unable to take it owing to sickness in the same way as Regulation 13 leave for other workers (i.e. the carried-over leave must be taken within 18 months of end of year it has been carried over from)
Employers should make sure their holiday policies clearly reflect these differences to avoid disputes.