Holiday Entitlement During Sick Leave UK 2026: Employer's Guide
The interaction between sick leave and annual leave is one of the most frequently misunderstood areas of UK employment law. When an employee is on long-term sick leave, what happens to their holiday? Do they still accrue it? Can they use annual leave instead of sick leave? What if the leave year ends while they're off?
These questions matter — particularly for long-term absences where untracked leave liability can quietly accumulate. This guide sets out the rules clearly.
Does Annual Leave Accrue During Sick Leave?
Yes — employees continue to accrue statutory annual leave during sick leave, regardless of how long they have been off.
This was established by a series of European Court of Justice cases and confirmed in UK law. The key principle is that sick leave and annual leave serve different purposes — sick leave is for recovery; annual leave is for rest. An employee who is ill is not "resting" in the sense intended by the Working Time Regulations, so they retain the right to take their holidays at a later date.
This applies to:
- Short-term sickness (a week off with a cold)
- Long-term sickness (months or years off with a serious illness)
- Any type of illness or injury covered by sick leave
Can Employees Take Annual Leave While Off Sick?
Yes — an employee can choose to request annual leave while they are on sick leave. The practical effect is:
- For those days, they receive holiday pay (usually full pay) instead of SSP or contractual sick pay
- The days come off their annual leave balance, not their sick leave record
- This can be beneficial for the employee if sick pay is lower than their normal pay
However, you cannot force an employee to use annual leave while they are genuinely sick. Requiring this would be an unlawful attempt to deprive them of their statutory sick leave rights.
"Workers continue to accrue their full statutory annual leave entitlement during a period of sick leave. They can carry this over if they are unable to take it."
— GOV.UK: Holiday Entitlement and Pay During Sick Leave
What Happens When the Leave Year Ends During Sick Leave?
This is where carryover rights become critical. If a leave year ends while an employee is on sick leave — and they haven't been able to take their holiday — they have a statutory right to carry over the unused leave.
The rules differ by type of leave:
- 4 weeks (Regulation 13 leave): Must be carried over. Employees have up to 15 months after the end of the leave year to take it.
- 1.6 weeks (Regulation 13A leave): Can also be carried over, though the statutory rule only mandates this if the employee was on sick leave. Your contract may be more generous.
Read our dedicated guide on annual leave carryover rules UK for a full breakdown of carryover situations.
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Accrued Leave on Termination After Long-Term Sick Leave
If employment is terminated during or after a period of long-term sick leave, all accrued but untaken annual leave must be paid out as a payment in lieu. This includes:
- Leave accrued but not taken during the period of sickness
- Any carried-over leave from previous leave years that hasn't yet been taken
This is a common source of unexpected cost when dismissing someone on long-term sick leave or when employment ends by mutual agreement. Always calculate the full leave liability before agreeing a settlement.
Can Employees Book Holidays That Overlap With Sick Leave?
There are two scenarios to consider:
Scenario 1: Employee Booked Holiday Before Falling Sick
If an employee becomes ill during a period of pre-approved annual leave, they have the right to cancel the annual leave and take sick leave instead — recovering those holiday days to use later. You are entitled to require a medical certificate, and you should update your records accordingly.
The employee's holiday cannot simply be converted to sick leave automatically — they must request this, and you need a formal notification process. Having a clear policy that covers this scenario prevents disputes.
Scenario 2: Employee Wants to Take Holiday While Currently Sick
An employee may ask to use some of their annual leave during a period of sickness — perhaps to attend a family event or simply to receive holiday pay instead of SSP. If they make a proper leave request, you can approve it. The days taken count as annual leave, not sick leave.
You cannot, however, require them to do this. It must be their choice.
Bank Holidays During Sick Leave
Bank holidays are a special case. If an employee is on sick leave during a bank holiday, and their contract entitles them to bank holidays off, the day should be treated as a bank holiday — not a sick day. The employee should not have a sick day "used up" for a public holiday.
See our dedicated guide on bank holiday entitlement UK for more on this.
Managing the Return to Work
When an employee returns from long-term sick leave, use a return-to-work interview to:
- Confirm they are fit to work and understand any phased return plan
- Discuss how much accrued annual leave they have built up
- Agree a plan for taking or carrying over their accumulated leave
- Ensure their leave records are updated correctly
Our return-to-work form template covers all these points and creates a clear record of the conversation.
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Key Takeaways
- Employees accrue annual leave throughout sick leave — short-term or long-term
- Employees can choose to take annual leave during sick leave, but cannot be compelled to
- If illness prevents leave being taken, the 4-week (Regulation 13) entitlement can be carried over for up to 15 months
- Pre-booked holidays that clash with sickness can be re-taken as sick leave — the employee must notify you
- Bank holidays during sick leave should be treated as bank holidays, not sick days
- All accrued leave must be paid out on termination, including leave built up during sick leave