absence management

Written by Julie Dawson, Head of HR Consultancy, Alcumus

Although each company’s holiday year can vary, most tend reflect the usual calendar year (January to December) or the fiscal/tax year (April to March).  So it seems quite opportune to provide some clarification on what happens to holiday entitlement which isn’t taken in the leave year, especially for those off on sick leave at the end of the holiday year.


Under Working Time legislation every worker is entitled to paid annual leave of at least four weeks.  If you add to this an extra 1.6 weeks leave in the UK (8 customary public holidays) that means that for full time workers, the minimum entitlement they should get is 5.6 weeks leave per year.

But the ever challenging question is what if someone hasn’t used all of their entitlement and then is off ill when the holiday year comes to an end?

In actual fact the regulations state that there is no entitlement to carry over leave from one year to the next and in fact we tend to include this in most of our client’s handbooks to make it clear.  They also state that there is no entitlement to a payment in lieu either, other than on termination.

Indeed it was also the norm to require your employee to ‘ask for the holiday leave’ and if they didn’t, then it was forfeited at the end of the holiday year.  Well may be not!

Case law

As a result of several cases that have gone through the courts over the past few years, (Schultz-Hoff [2009], Pereda v Madrid Movilidad SA [2009], NHS Leeds v Larner [2012] and KHS AG v Schulte [2012] the next issues were considered:-

  • In what cases might carry over be reasonable?
  • Whether there were any time limits on how far back an employee could go to claim retrospective holidays not paid?
  • Whether they needed to ask for the time off?
  • Whether there was an expectation that the employer should pay it anyway?

We’ll try to answer the above questions for you but to be clear, sick leave is intended to enable an individual to recover from an illness, whereas annual leave is intended to enable a worker to enjoy periods of rest and relaxation from work for their well-being and reasons of health and safety. So although someone is not at work, in law there is a distinction between ‘sick leave’ and ‘annual leave’.

So in looking at the above cases below is a summary of the decisions generated from the European Court of Justice and the Court of Appeal respectively.  That:-

  • Workers are entitled to take accrued holiday during a period of sick leave; but we would usually advise our clients that the individual in question does so when any current sick/fit note has expired, or if not, ask your employee to return to their doctors’ first to ‘sign them off as fit to take leave’ to avoid any conflict or confusion as to whether the employee is on sick leave or holiday (ie make your records/data clear as to the periods of leave and what it is for)
  • If workers do not wish to take their holiday entitlement during a period of sick leave or indeed are unable to do so, then the holiday must be granted at a different time, even if that means it is carried over into the next leave year.  This is irrespective of whether you believe they had the capacity to ask or take it, and they do not have to produce any evidence either.
  • If carry over is allowed/granted sadly the ‘carry over period’ is not defined in law but as a result of the Shulte case, it was clarified that a retrospective claim can be limited to a minimum of 15 months and a maximum of 18 months, and any untaken leave beyond this can be forfeited.  The rationale given was that annual leave ceases to achieve the aim of enabling periods of rest from work when it goes beyond a certain time.
  • The worker does not have to ‘exercise his/her right to ask for annual leave’ whilst on sick leave and does not therefore automatically forfeit the entitlement if they fail to ask for it.

As always if you would like to discuss any element of this article, or any other employee/HR related matter, please speak with your dedicated Consultant or ring the office on 01484 439930.