Q&As

If an employee returns to work after six months off sick, is the employer allowed to pay them in lieu of untaken holidays at the end of that holiday year?

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Published on LexisPSL on 30/05/2017

The following Employment Q&A provides comprehensive and up to date legal information covering:

  • If an employee returns to work after six months off sick, is the employer allowed to pay them in lieu of untaken holidays at the end of that holiday year?

The following Practice Notes in Lexis®PSL Employment are relevant to your enquiry:

  1. Holiday

  2. Holiday pay

  3. Holiday and sickness absence, which considers the practical issues which arise in relation to the entitlement to annual leave and holiday pay of workers who are, or have been, absent on sick leave, in light of case law on the subject

The statutory right under the Working Time Regulations 1998 (WTR 1998) is to a total of 5.6 weeks' annual leave each 'leave year', made up of:

  1. a basic entitlement to a minimum of four weeks' annual leave (20 days for a regular full-time worker) each leave year, implementing the right to annual leave under the Working Time Directive

  2. an additional entitlement to 1.6 weeks' annual leave (eight days for a regular full-time worker) each leave year, which is a right under domestic legislation only

The difference in the provenance of the legislation means that the two types of leave may need to be treated differently, as European Court of Justice (ECJ) decisions will apply to the basic four-week entitlement but not necessarily to the additional 1.6 weeks' additional annual leave. This is particularly evident when it comes to holiday and sickness absence, and whether an employer must permit leave under WTR 1998 to be carried over (see more on this, below).

Under WTR 1998:

  1. the basic four weeks' annual leave must

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