This article explains the important differences between Annual Holidays in Advance and Sick Leave in Advance as they relate to the Holidays Act 2003.
While both involve an employee taking leave where the entitlement has not yet "arisen" (at leave anniversary date) they may be handled very differently.
Annual Holidays in Advance - has a framework in the Holidays Act, whilst Sick Leave in Advance - has no such framework.
⚠️ Note: This article provides a general overview of "leave in advanced" principles. If you have any questions relating to a specific employee's agreement or your legal obligations, please raise this with your payroll contact or seek employment relations advice.
The Holidays Act 2003 includes a specific framework that allows an employer and employee to agree to the employee taking a portion of their annual holidays 'in advance'.
The key requirement is that it must be a mutual agreement in writing between the employer and the employee.
An employer is not obligated to agree to a request for annual holidays in advance.
If an employee leaves the company, the employer is entitled to deduct the value of any advanced holidays (that have not yet been accrued) from the employee's final pay.
Conversely, "Sick Leave in Advance" is not a statutory entitlement under the Holidays Act 2003. The Act only provides a minimum entitlement after 6 months of service*; it does not give an employee the right to take paid sick leave they have not yet earned.
Granting sick leave when an employee's balance is nil is a discretionary decision made by the employer, based entirely on private or mutual agreement. This agreement can take two forms:
A specific clause in the Employment Agreement that outlines a company policy (e.g., "The company may, at its discretion, grant up to 5 days of sick leave in advance.").
A one-off, case-by-case agreement made at the time of the illness.
If there is no policy in the employment agreement, the employer is not obligated to pay the employee, and the options must be discussed.
The correct action to take depends on the leave type and the agreements you have in place. The table below outlines the common scenarios and their correct outcomes.
Scenario
Agreement / Policy
Correct Action / Outcome
Employee requestsAnnual Holidays in Advance.
(Governed by Holidays Act)
Employer and employee mustmutually agree. If agreed, proceed with the leave.
Employee (no sick leave balance) is sick.
Employment Agreementcontains a clausefor sick leave in advance.
Follow the policy as written in the agreement. Process theSick Leaveand it will be deduct from the next entitlement.
Employee (no sick leave balance) is sick.
Employment Agreement is silent / no policy exists.
The employer and employee must agree on one of the following options:Agree to grantSick Leave in Advance(this is discretionary).Agree to useAnnual Holidays.The employee takesLeave Without Pay (LWOP).
Employee (no sick leave balance) is sick andno agreementis reached.
No policy and no one-off agreement
The default outcome isLeave Without Pay - (excluding annual holidays) taken, as there is no statutory or contractual entitlement to paid sick leave.