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Holidays and Sickness Absence - A Double Whammy for Employers

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As the holiday season is now upon us, many employers will be surprised to learn that unfortunate and costly consequences can arise where employees are off sick and do not take their entitlement to holidays or indeed where sick leave overlaps with planned holidays.

A sick ladyThere has been a cluster of cases in the Tribunals and beyond in this area and from these, a number of principles have now been established although frustratingly, a number of questions have still to be answered. The House of Lords gave its ruling on a long running case (H M Revenue & Customs v Stringer) which concerned five employees who had brought various claims for holiday pay even though they had been on long-term sick leave and had exhausted their entitlement to contractual and statutory sick pay.

The outcome is that employees can and do continue to accrue holidays whilst on sick leave. In addition, if a worker is unable or does not have the opportunity to take annual leave they will be entitled to carry this over into a subsequent holiday year. However, it is unclear whether an employee must have actually tried to take the holiday in order to be owed holiday pay.

Another principle which is now clear is that employees can reclaim holidays lost by sickness. This principle will benefit employees who for example have arranged to take annual leave but who are unfortunately involved in an accident or are sick just prior to this holiday beginning. In such cases, the Courts have said that employees have the right for their holiday to be “reallocated” if it is spoiled by sickness absence.

Another unfortunate consequence for employers arising from long-term sickness absence is that employees who are off sick and who then leave their employer will be entitled to be paid in lieu of full holiday entitlement if their absence from work prevented them from taking holidays.

In one recent case case (Rawlings v The Direct Garage Door Company) the Sheffield Employment Tribunal ruled that Mr Rawlings, who was off sick for more than a year before resigning from his position, was entitled to be paid in lieu of his full holiday entitlement because he had not been able to take holidays during his employment because he was off sick.

The combined effect of the various rulings is that an employee may have the choice of taking annual leave at the same time as being off sick. Alternatively, they can choose to take missed holidays later on. The choice made by the employee could well depend of course upon whether or not they receive full pay during sickness absence or simply statutory sick pay. An employee on long-term sick who does not receive pay in the normal way may therefore elect to have part of their sickness absence treated as holidays so that they are then of course paid in full. Alternatively, the worker who has missed out on his or her holiday due to being off sick can elect to carry this over to the next holiday year.

Employers may therefore have to grapple with some policy decisions relating to handling awkward requests from staff who are already off sick or who, having planned holidays, then become sick or incapacitated by injury.

For further queries on this or any other employment problem please contact Paul Grindley on 0113 3993424 or paulgrindley@keeblehawson.co.uk.

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