A worked example setting how to calculate pay in lieu of holiday where an employee with normal working hours terminates employment.
In Schultz-Hoff v Deutsche Rentenversicherung Bund; Stringer and others v Her Majesty's Revenue and Customs Cases C-350/06 and C-520/06 ECJ, the ECJ has held that the Working Time Directive allows member states to prevent workers from taking annual leave during periods of sickness, provided that they are permitted to take it at some other time. If sickness prevents a worker from taking his or her annual leave entitlement, it must be carried over into the next leave year. Workers whose employment is terminated cannot have their payment in lieu of annual leave reduced on account of a period of sickness prior to the dismissal.
The European Court of Justice has held that the right to paid annual leave continues to accrue during sick leave and, on termination of the employment relationship, a worker who has been on sick leave and unable to take paid annual leave is entitled to a payment in lieu.
A model contract clause on holiday entitlement and pay on termination.
In Morrish v NTL Group Ltd  CSIH 56 CS, the Court of Session has held that a pay in lieu of notice clause could not be implied into a contract of employment.
In Burlo v Langley and another  EWCA Civ 1778 the Court of Appeal holds that an employee's compensation for lack of notice was restricted to her actual loss where she would have been in receipt of statutory sick pay during the notice period.
HR and legal information and guidance relating to payments on termination.