In a case before the European Court of Justice, commonly known as Stringer and ors v HM Revenue and Customs, the ECJ held that holiday entitlement during long-term sickness absence accrues in the normal way and, if it is not taken, the worker is entitled to payment in lieu.

However, as to whether a worker is entitled to ask for payment of their accrued entitlement; the position is somewhat uncertain.

The current Working Time Regulations do not allow for holiday to be carried forward and thus require amendment, so as to allow a worker on long-term sickness absence to do so and/or receive payment in lieu of their accrued entitlement on termination of employment.

However, the Regulations are yet to be amended, although employers are advised to follow the principle as a matter of good practice. In addition, the ECJ also said member states could decree whether or not paid holiday could be taken during a period of sickness absence and, again, this has yet to happen.

There is also debate as to whether accrual should refer to the worker’s current statutory entitlement i.e. the equivalent of 5.6 normal working weeks, or instead whether it should be restricted to the amount as prescribed under the originating European Directive – this being 4 working weeks.

To add complexity; in a recent case called Fraser v Southwest London St George's Mental Health Trust, the Employment Appeal Tribunal held that a worker on long-term sickness absence must actually request annual leave in accordance with the Working Time Regulations before they are entitled to payment. The EAT also held that such an approach was consistent with the above ECJ case.

As such, it appears that if a worker does not actually put their employer on notice of their intention to take holiday; any unused holiday entitlement will be lost upon expiry of the particular holiday year.

The current position could thus be summarised as follows:

It seems that workers are entitled to accrue their holiday entitlement during periods of long-term sickness absence, and that this could be carried forward and/or paid up upon termination of employment. However, if workers do not actually make a proper application for holiday during the year in which it accrues, any such entitlement is lost upon expiry of the holiday year.