How To Manage Annual Leave And Sick Leave Overlap

You’ve booked a week off work and filled it with exciting plans. You’re going to take a trip to the beach, finally open that book you’ve been meaning to read, make a long overdue visit to your parents, and recharge your batteries. Then it happens – day one of your holiday and you get sick. What could be worse?

How about not being able to cancel your annual leave?

That’d be the icing on the cake.

Getting sick during annual leave is the last thing anyone wants, but it happens. As a manager, knowing how to deal with this sticky situation in advance will save you headaches when it eventually happens. We’ll explore how to deal with things when sick leave overlaps with annual leave, including what the law says about it.

What should you do when employees get sick during annual leave?

Put simply, if someone gets sick during annual leave then yes, you need to give them the option to cancel their annual leave, record it as sickness, and allow them to take their holiday at a later date. It’s only fair, given that they’d be allowed to take sick leave if they weren’t off on holiday in the first place.

Forcing someone to use their precious leave entitlement when they can’t do anything with it isn’t just mean-spirited, it’s probably bad for your business, too. Taking time off is important, giving people the chance to relax, unwind, and focus on the things that bring them joy.

If their long-awaited period of annual leave is ruined by a stomach bug or bout of flu, they’re not going to benefit from it. Taking away their option to use those days of annual leave at another time means they’re more likely to suffer from burnout or lack of motivation in the long term and will end up being less productive overall.

What does the law say about this?

These ideas are supported by law, too. The European Court of Justice ruled all the way back in 2012 that ‘a worker is entitled to take paid annual leave which coincides with a period of sick leave at a later point in time’.

They did this on the basis that there’s a fundamental difference between the purpose of sick leave versus annual leave. Holiday leave is supposed to give people the chance to rest and relax however they want to. Sick leave, on the other hand, is specifically given so they can recover during a period of sickness.

The ECJ ruling, related to the Stringer v HMRC case, even included guidance on how it relates to the existing Working Time Regulations 1998. In short, employees on sick leave should still accrue statutory annual leave allowance. Any holiday entitlement that’s cancelled as a result of sickness absence during one holiday year is something they can carry over to the next leave year.

What are the consequences of employees using annual leave while off sick?

While the law permits it, it’s not necessarily easy to deal with as a business. There are a couple of problems with giving people the chance to use their annual leave allowance during sick leave. Firstly, it could mess with your understanding of the overall levels of sick leave in the business when you’re looking back over the year.

More cynically, you can also imagine a situation where somebody tries to request a holiday at short notice which is denied, but they then take the day off sick instead only to later convert it into a day of annual leave.

Your position on using statutory holiday leave during sickness absence should be made clear in your sickness absence policy to avoid any doubt about what your team can and can’t do.

Can employees take annual leave while on long-term sickness absence?

The other side of annual leave and sick leave overlap is the question of whether people can purposely use paid holiday days while they’re on a period of long-term sick leave.

Long-term sickness is usually defined as being off sick for more than four weeks. It can be caused by a physical or mental health condition, and typically needs a ‘fit note’ (aka sick note) from a doctor saying they’re not fit to work. (Self-certification should only be valid for up to seven days’ absence, including bank holidays and weekends.)

While away on long-term sickness, some employees might want to use their holiday pay entitlement to top up their statutory sick pay (SSP), using holiday pay as a way to get full pay even while they’re on sick leave. (Their contractual sick pay might not be the same amount as their full-time pay, unless their company has a generous sick pay scheme).

The short answer is that, legally, there’s nothing stopping them, and as we said above, they are entitled to carry over unused allowance.

How important is time off?

Giving people the chance to chill out by taking time off from work (that isn’t ruined by sickness!) is enforced by the law for a reason. It’s hugely important to wellbeing. Time off doesn’t just help people relax and recharge before getting back to being productive, it’s likely to reduce sickness absence and contribute towards better company culture and a happier workplace.

On the surface, it seems like the more days off an employee takes in a year, the less productive they’ll be, but the opposite is true. We’re all human, and humans need breaks. That’s why you should be encouraging your people to take time off to relax, and helping them make the most out of every holiday.