Holiday Accrual and Sickness

If an employee has been unable to take their annual holiday leave as a result of sickness absence, then employers should allow them to carry over up to four weeks of it.

This was due to a case from the German Labour Court- Schultz-Hoff v Deutsche Rentenversicherung Bund. In this case, the CJEU ruled that the basic four weeks of statutory annual leave accrues in all periods of sickness absence. This includes long-term sickness. The court also ruled that employees are entitled to take any leave lost due to sickness at another time. If their employment is terminated, employees should be paid for this leave accrual in lieu.

The court also laid out rules on when this leave could be taken. The directive states that employers have the choice:

• to allow employees to use their annual leave during a period of sickness absence (in other words, convert a period of sick leave into holiday leave for which they would be paid in full)

• or to allow them to carry the unused holiday over to the next holiday year in circumstances where they had not had the opportunity to take their holidays during the relevant leave year.

The CJEU ruled that employees on long-term sick would effectively be denied the opportunity to take their holidays towards the end of the holiday year. For this reason, they must not be prevented from carrying forward their unused holidays.

The government has amended the UK’s working time regulations to reflect the CJEU's decision. This means that in the UK, any statutory holiday entitlement that is not used because of illness can be carried over into the next leave year.