The question of what to do about the holiday entitlement of employees who are on long term sick leave has vexed employers, lawyers and courts for many years.
Case law is continuously developing and clarifying this area of law.
The current position is that if an employee is on long term sick they will continue to accrue their holiday entitlement and, if they ask to take a period of paid annual leave, although still sick, you should allow them to do so.
Although you do not have to allow employees to carry over holiday if they have been unable to take it because of sickness; however, it is a risky proposition if you have not informed the employee of their outstanding holiday entitlement and confirmed to them that if they don’t take their leave, they will lose it.
Where you have an employee on long term sick, it is very important to always consider the risk of disability discrimination.