Employees continue to build up statutory holiday while they are off sick. If they leave after long-term sickness absence, payroll still needs to check holiday accrued, holiday taken, and any statutory leave carried over because sickness stopped them taking it.
That makes final holiday pay one of the easiest leaver payments to get wrong.
This guide explains the rules, the calculation steps, and the records to check before running the final payslip.
Quick answer
When someone leaves after long-term sick leave:
- statutory holiday continues to accrue while they are off sick;
- unused statutory leave may need to be carried over if sickness stopped them taking it;
- ACAS says workers on long-term sick leave can carry over a maximum of 4 weeks' holiday entitlement;
- that carried-over leave must be used within 18 months from the end of the leave year in which it was accrued;
- any untaken holiday owed when employment ends should be included in final pay.
Use the holiday pay calculator for an estimate, then check the worker's contract, leave records, and pay pattern.
Does holiday accrue during sick leave?
Yes. GOV.UK says workers build up holiday entitlement while off work sick.
This applies even if the sickness absence lasts a long time and even if the worker is no longer receiving full pay. Statutory holiday is a separate legal right from sick pay.
For employers, the practical problem is record keeping. If a worker has been absent for months, payroll needs to know:
- the leave year dates;
- the worker's annual statutory entitlement;
- any contractual entitlement above the statutory minimum;
- holiday taken before sickness absence;
- whether the worker was unable to take holiday because of sickness;
- what holiday was carried over from earlier leave years.
Carry-over during long-term sickness
ACAS says that if a worker is on long-term sick leave, they can carry over a maximum of 4 weeks' holiday entitlement.
They must use that carried-over holiday within 18 months starting from the end of the leave year in which they accrued it.
That does not automatically mean every day of contractual holiday carries over. Extra contractual holiday depends on the employment contract, handbook, or relevant agreement.
What should be paid when employment ends?
When employment ends, the employer should calculate payment for untaken holiday that is still owed.
For a long-term sick leaver, that can include:
- Statutory holiday accrued in the current leave year up to the termination date.
- Statutory holiday carried over from an earlier year because sickness prevented the worker from taking it.
- Contractual holiday if the contract says it is payable.
Do not treat sick leave as a break in holiday accrual. Do not assume the employee has "used up" holiday because they were absent.
Step-by-step calculation
1. Confirm the leave year
Check whether the leave year is:
- calendar year;
- tax year;
- anniversary of start date;
- another date set by contract or policy.
The leave year determines how much holiday accrued by the leaving date and whether carried-over leave is still within the 18-month limit.
2. Calculate current-year accrued holiday
For a full-year worker with a fixed entitlement, the basic approach is:
Annual entitlement x proportion of leave year worked = accrued entitlement
For example, if the worker has 28 days a year and leaves halfway through the leave year:
- 28 x 6/12 = 14 days accrued
3. Add valid carried-over holiday
Add any statutory holiday that was carried over because the worker could not take it due to sickness, provided it has not expired.
For long-term sickness, check the maximum 4-week carry-over rule and the 18-month time limit.
4. Subtract holiday already taken
Deduct any holiday already taken in the relevant leave year, plus any carried-over leave already used.
5. Apply the correct pay rate
For fixed-hours workers whose pay does not vary, holiday pay is usually based on normal pay.
For variable pay, fixed hours with variable pay, irregular-hours workers, or part-year workers, the holiday pay reference period can matter. ACAS guidance explains how the 52-week average works for different working patterns.
Worked example
Alex works 5 days a week and receives 28 days' holiday a year. The leave year runs from 1 January to 31 December.
Alex:
- went on long-term sick leave on 1 March;
- leaves employment on 30 June;
- took 3 holiday days before sickness absence;
- has 5 days of valid carried-over statutory holiday;
- has a daily holiday pay rate of GBP 120.
Current-year accrued holiday:
- 28 days x 6/12 = 14 days
Add carry-over:
- 14 + 5 = 19 days
Subtract holiday taken:
- 19 - 3 = 16 days owed
Final holiday pay:
- 16 x GBP 120 = GBP 1,920
This is a simplified example. Real payroll should check contract terms, the worker's pay pattern, and whether carried-over leave is still within the allowed period.
Common mistakes with sick-leave leavers
Avoid these mistakes:
- stopping holiday accrual when sick pay stops;
- ignoring statutory holiday carried over because of sickness;
- paying carried-over contractual holiday without checking the contract;
- using the wrong leave year;
- missing holiday taken before the sickness absence;
- applying a fixed daily rate to a variable-pay worker;
- failing to keep a clear audit trail for the final payslip.
Payroll checklist
Before processing the final pay, check:
- Termination date.
- Leave year start and end.
- Statutory annual leave entitlement.
- Contractual holiday entitlement.
- Sick leave dates.
- Holiday taken before or during sickness.
- Holiday carried over because of sickness.
- Whether carried-over leave is still within the 18-month window.
- Pay pattern and reference-period data.
- Final payslip description.
Where Workmax helps
Long-term absence creates risk when holiday, HR, timesheets, and payroll records live in separate systems.
Workmax keeps absence, holiday, employee records, and payroll-ready data connected so payroll can check what a leaver is owed without rebuilding the history from email threads and spreadsheets.
Useful next steps:
- Holiday pay calculator
- Final pay when an employee leaves
- Employer leaver checklist
- HR software
- Payroll software
Official sources checked
This article was refreshed against the following official sources on 1 July 2026:
Bottom line
Sick leave does not stop statutory holiday from building up.
For long-term sick leavers, the final pay calculation should include current-year accrued holiday, valid carried-over statutory leave, and any contractual entitlement that is payable under the contract. The safest process is to calculate it step by step and keep the final-pay audit trail with the payroll record.
