In the past employers have sometimes tended to ignore staff on long term sickness absence in the belief that they are not costing the employer anything once SSP entitlement has been exhausted. However, this overlooks the fact that holiday entitlement continues to accrue so long as employment continues.

We have recently come across two cases which are substantially different in their conclusions, though both are helpful to employers.

The first case involves a recent decision of the EAT (Employment Appeal Tribunal ).

The case concerned a nurse who had been absent from work for several years before being dismissed. She claimed unpaid holiday pay in respect of years prior to the holiday year in which she was dismissed. In essence, the EAT said that her claim failed because she had not given notice to take holiday during the years in question.

This is an interesting decision as there is an underlying principle that someone cannot take holiday whilst they are absent through sickness.


The second case concerns a decision of the ECJ, the European Court of Justice and therefore would be binding on any national court.

Without going into the details of the case, the decision establishes the principle that an employer may establish a time limit after which holiday will no longer accrue, though this must be “substantially longer” than the holiday year.   The case in question involved a period of 15 months.

This opens up the prospect that employers could insert such a limitation into their employment contracts. However, we would always advise our clients to begin the process leading to termination by reason of capability (ill health) if an employer has been absent for 6 months, with no prospect of a return to work – in the absence of any special considerations.