What happens when annual leave and staff sickness absences collide?

It’s an all too familiar situation, you have an employee about to start a period of annual leave and they fall ill. They come to you with the question:

“Can I reclaim my holiday entitlement because I’m ill?”

The short answer is yes, they can, and they don’t have to be signed off by a doctor initially. However, as with all things HR related there are some things to consider.

The legal position

The EU Working Time Directive stipulates that employees receive a minimum of 4 weeks paid annual leave. However, in the UK, the statutory minimum is 4 weeks, plus 8 days in respect of Bank Holidays, making a total statutory holiday entitlement of 5.6* weeks.  

The purpose of annual leave is to provide workers with ample rest and relaxation time away from their place of work.

By contrast, periods of sickness absence are specifically to facilitate recovery and recuperation from illness. Therefore, these are two different types of absence. This means that, if an employee becomes unwell shortly before, or during, a planned period of annual leave, they are entitled to ask for the absence to be counted as sickness. Thus, allowing them to rebook the scheduled leave for another time.

Over the years there have been several successful cases brought where the employer has not allowed their employee to reclaim their annual leave. The employee has subsequently taken legal action against their employer and the case has been found in the employees favour.

What does that mean for your business?

In short, you do need to change the absence to sickness and allow your employee to take their annual leave at another time, subject to your normal rules for booking annual leave.

By the same token, if an employee is absent for a long period of time due to ill-health, they will continue to accrue their holiday entitlement. If they cannot take all their annual leave within the business’ leave year, it should be carried over for them to take when they return to work.

However, it’s important to consider that when the absence changes from annual leave to sickness leave, the period will be paid in line with your company’s policy. So, if employees are only entitled to SSP, that will then apply, and they will be paid less than if they were on annual leave.

Could this be open to abuse by staff?

All systems bring a risk of abuse and employers have voiced concerns that employees may seek to abuse this rule in order to take more time off.

However, you can reduce this risk if you have a robust absence management policy and supporting procedures in place. These will provide a deterrent to employees who might be tempted to abuse the system but know that they will be required to meet your company criteria for sickness absences.

And, of course, if your company policy is to pay SSP, there is no financial benefit for the employee who will be worse off as a result.

Do you need help with policy development or people management?

If you are already a client, we can provide you with the necessary support and advice if this issue has come up in your business.

If you are not currently a client of Kate Underwood HR and you have any concerns regarding your absence management policy and procedures we would be happy to arrange a FREE consultation to show you how we can help with this and all other HR matters.

Please don’t hesitate to email me on [email protected], call us on 02382 025160 or book a call.


*correct at time of writing

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