Employee entitlements to annual leave and notice pay whilst sick

employers and employees alike.

How have employee entitlements changed?

Long term sick leave will not affect an employee’s annual leave

Employees who have long exhausted their entitlement to sick pay because of a long period of sick leave are still entitled to claim full pay in respect of their holiday entitlement pursuant to the Working Time Regulations. These regulations allow full time workers a minimum 5.6 weeks of annual leave in total.

Annual leave can be converted to sick leave if necessary

The Courts have now confirmed that if an employee falls ill whilst on holiday, they can convert their holiday to sick leave, receiving any contractual sick pay they are entitled to and thereafter take their holiday again when they are feeling well.

In respect of the above, a formal request does not need to be made by the employee in order to carry over untaken leave

There has been a further Court of Appeal decision that has strengthened employees’ positions concerning entitlement to paid holidays during long term sickness absence. This was the case of NHS Leeds -v- Larner. In this case, the Court of Appeal held that a worker who was unable to take annual leave due to sickness did not have to make a formal request in order to carry the untaken leave over into the next leave year in order to be entitled to receive a payment in lieu on termination of their employment. This contradicts what was previously thought; that in order to qualify for payment in lieu of unused holidays; the employee would need to make a formal request to the employer.

Payments in lieu of an employee’s notice period

It is perhaps worth pointing out that employees on long term sickness also have the right to payment in lieu of their notice period on the termination of their employment. This can be particularly significant for those employees who have a long period of service with their employer. In some cases, it could be that an employee receives an entitlement to full pay for 12 weeks on the termination of their employment even if they have long exhausted their entitlement to statutory sick pay. There are some exceptions to this rule – particularly in circumstances where an employee has a contractual entitlement to notice that is greater than the statutory minimum entitlement to notice.

Alan Lewis

About Alan Lewis

Alan joined Linder Myers in 1990. He became a Partner in 1998 and was responsible for setting up the Employment department in Manchester. Alan now leads the Employment team in the Manchester office. He mainly works from Manchester, although also acts for clients from the Lancashire office. Alan lives in Lancashire with his wife and son. His hobbies and interests include football, boxing, music (occasional guitar player) and supporting Oldham Athletic.

6 thoughts on “Employee entitlements to annual leave and notice pay whilst sick

    1. Jim Barnes

      The law very clear in this case, a formal discussion with your employer should resolve this issue at nil cost to both parties.

    2. Alan LewisAlan Lewis

      There are special rules under Sections 86-91 of the Employment Rights Act 1996 which are relevant to employees who are unable to attend work because of sickness during their notice period.

      These Sections provide an entitlement to an employee to receive their full pay for their statutory period of notice regardless of whether they have exhausted the right to contractual sick pay and/or statutory sick pay.

      However, these rules do not apply where the notice to be given by the employer to terminate the contract is at least one week more than the statutory minimum period of notice that the employee is entitled to.

      Therefore, I would need to know how long you have been employed by the NHS and precisely what your contract says in relation to your entitlement to notice. If, for example, you have been employed by the NHS for a period of less than 10 years and your contract provides that you are entitled to 12 weeks’ notice, then you would not be entitled to full pay for the period of your notice.

      1. Jim Barnes

        Hi Allan
        The orignal comment refers to an NHS employee who has been in employment for over 25 years as a nurse. He has been on long term sickness and has also exahusted his statoury sick pay his application for illhealth retirement has been accepted by the NHS pension agency . His notice by his NHS contract is 12 weeks.his employers are refusing to pay the notice peroid, any advice appreciated.

  1. fudge

    Hi Allan,
    The individual I am refering to has worked for the NHS for 25 years, his contract has been terminated on ill health, he has exhausted both statoury and contractural sick pay.The nhs notice is 12 weeks for his lenght of service could you please advice if he is entitled to payment in liue of notice and for this period.

  2. Alan LewisAlan Lewis

    Ordinarily, if this individual had been given notice of termination by his employer, he would be entitled to payment in lieu of notice (subject to me having sight of his contract). However, I note that you refer to an application for ill-health retirement. If he applies for such ill-health early retirement it may be the case that his employment was not formally terminated by his employer. If this was the case he could not claim a payment in lieu of notice for 12 weeks. Much will depend upon the terms of the ill-health retirement scheme and the correspondence the employee has received from his employer.

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