Holiday sickness: Can an employee claim back holiday if they are unwell on leave?

How should you respond if a member of staff claims they have been unwell while on holiday and requests an annual leave ‘refund’?

The school holidays are upon us once again and no doubt many of your employees will be taking extended summer breaks. You may have successfully navigated the minefield of dealing with competing requests for leave, but how should you respond if a member of staff claims they have been unwell while on holiday and requests an annual leave ‘refund’? 

The law 

The key cases are the Spanish case of Pereda v Madrid Movilidad SA and the UK case of NHS Leeds v Larner. Taken together, the law as it stands is that an employee who is ill during a period of holiday is entitled to transfer those days when they are ill to a period when they return from leave and, if this cannot be achieved in that leave year, to carry it over into the next. Subsequent appellate cases (Plumb Duncan Print Group) have found that the carried over leave needs to be taken within 18 months of the leave year from when it accrued. 

The importance of policy  

As always, the most robust way to keep this under control is to have a clear policy in place setting out what your position is if someone is ill or injured just before or during a scheduled holiday. 

It is important to remember though that, if you have a contractual sick pay scheme, you will need to seek agreement from your employees and consult with any recognised Trade Union before making any changes. Seek legal advice before the event to discuss process and approach. 

What should your policy say?  

Any provisions on “sickness absence” holidays are of course likely to form part of an existing policy on absence or annual leave. Some important issues to consider are set put below: 

  • Think about the circumstances in which you’ll allow ‘carry over’ of leave. If you already allow people to carry over leave you might consider withholding this facility in a particular year if individuals are taking forward ‘sickness absence’ holidays (as permitted by case-law) instead.Think about which days can be ‘carried over’. You might consider limiting this principle to the first 4 weeks of leave prescribed by EU law and not to the further 1.6 weeks leave afforded by UK law or additional contractual holiday (for which you could expressly prohibit ‘carry over’ or deferment). 
  • Explain what payments will be due (see below). 
  • Consider issues such as the number of people in the team who are also due holiday. Will ‘re-allocated’ holiday be the last to be scheduled? Are the normal rules on allocating holidays to be applied? 
  • What requirements will there be for certifying the illness? If you require the employee to provide a medical certificate bear in mind that you will have to be prepared to accept one from a non-UK doctor and may be required to pay for this. 
  • How will you deal with the situation where someone falls ill just before a holiday?  The best approach is to obtain a certificate from the employees GP as soon as possible. In some circumstances, the employee may be unfit for travel or to take part in their planned activities (for example skiing or hiking) but still be fit for work, saving the business the ‘double hit’ of sick pay and holiday pay. This may also suit the employee who can re-book their holiday at a later date. 

What do you pay? 

If you pay company sick pay you may wish to consider changing the scheme rules and only pay SSP when individuals are absent due to sickness whilst on holiday. Whilst this will still be an extra cost (as the individual will still take the ‘additional’ leave at a later date) it obviously amounts to less of a financial burden than paying full company sick pay followed by further paid holiday later in the year. However, once again, you will need to bear in mind the need to seek agreement from employees or consult a recognised Trade Union if making any changes to a contractual policy. 

Another option might be to pay only SSP only if the sickness occurs whilst on holiday, or overlaps with holiday, but full sick pay if the absence precedes the annual leave. 

What if you suspect an employee is abusing the process?  

If you strongly suspect that an employee has abused the ‘holiday refund’ process then you may wish to pursue disciplinary action. However, it is likely to be very difficult to evidence misconduct. 

It may be more effective to put in place deterrents, such as limiting access to contractual sick pay where an employee falls ill while on holiday. For example, you might insist on medical certification for company sick pay to become payable. Again, you must clearly be prepared to accept a note from a non UK doctor. This is likely to make the option of turning paid holiday into sick leave much less attractive. 

Equally, making it clear that any absence incurred in this way would count towards any trigger points the employer may have in relation to sickness absence levels may prompt any employees tempted to abuse the process to think twice. 

Recording and monitoring sickness absence properly will help to identify any abuse of the system. Should absences of this nature become a regular occurrence you may be able to advise the particular employee that regardless of a note being provided you are not prepared to extend company sick pay to absences incurred whilst on holiday in the future. SSP would still be payable. 

The intersection of sick leave and annual leave is notoriously tricky and brings into play a surprising amount of complex domestic and European law. If you are drawing up a new policy or dealing with a grievance on this issue we would be happy to advise you. 

David Summers (david.summers@weightmans.com) is an Associate in the Employment, Pensions and Immigration Team and is based in Birmingham. If you have any questions, please do not hesitate to contact David or speak to your usual Weightmans advisor.

Share on Twitter