Updated January 2024.

There has been plenty of confusion surrounding how workers holiday entitlements interact with sickness absence. With several years of conflicting UK and European Court decisions, we are finally getting close to some clarity about what entitlements people have to holiday entitlement when they are sick.

Here we break down what we know so far.

There is also more clarity now with new legislation from 1st January 2024, which applies to Great Britain (England, Wales and Scotland) that clarifies when unused holiday can be carried over into the next leave year, that could not be taken because of sickness:

  • If a worker (who works regular hours throughout the year) is unable to take all of their statutory holiday entitlement (28 days) due to sickness, they can carry forward up to 20 days into the following leave year. This leave must be taken by the end of the 18 months following the end of the leave year in which it was accrued, and it must be paid at the ‘normal’ rate.
  • For further details, see main article above.

Do you accrue Holiday entitlement if you are off work on sick leave?

In January 2009 the European Court of Justice ruled that workers are entitled to accrue statutory minimum holiday entitlement while on sick leave and can carry that leave over into another year if they are too ill to take it and prefer not to take it during their sick leave (and / or be paid in lieu for any leave they are unable to take if their employment is terminated).

And it is also accepted that if an Employee chooses to take their holiday leave entitlement while on sick leave they would be paid normal holiday pay rather than company or statutory sick pay (which may be less or none depending on how long they have been off sick) for the days they treat as annual leave. If you qualify for SSP you would continue to receive this during any annual leave pay period.

What was still in doubt was the issue of carrying over unused leave (accrued because of sickness absence) into the next leave year. The UK referred this to the UK House of Lords in May 2009 as the way the UK Law on the Working Time Directive is written conflicts with the 2009 decision by the ECJ – the law in the UK requires workers to use their holiday entitlement within the leave year or lose it (unless an agreement exists to the contrary), while the EC Directive itself is silent on this issue but ECJ case law has said carry over of leave is allowed.

The House of Lords ruled that people who are denied to accrue holiday pay while on sick leave can make a claim to an Employment Tribunal for an ‘unauthorised deduction from wages‘ (with claims possibly being able to be back-dated as far back as 6 years). This ruling supercedes UK WTD Legislation and UK Tribunal decisions since then have backed up the ECJ’s decision.