If an employee is on sickness absence during a bank holiday, are they entitled to be paid or to receive time off in lieu?
The employee's entitlement will depend on whether or not the bank holiday forms part of their statutory holiday entitlement under the Working Time Regulations 1998 (SI 1998/1833). Under the Regulations all workers are entitled to 5.6 weeks' paid holiday in any leave year. Where an employer grants employees the minimum holiday entitlement under the Regulations (5.6 weeks) and this includes bank and public holidays, a bank holiday will form part of the employee's statutory holiday entitlement.
In Pereda v Madrid Movilidad SA  IRLR 959 ECJ, the European Court of Justice held that a worker who is on sick leave during a period of scheduled annual leave must be allowed to take the annual leave at a later time. This means that where an employee is on approved sickness absence during a bank holiday that forms part of their minimum holiday entitlement, the employer should allow them to take a day off in lieu. Payment in lieu of the statutory holiday entitlement is permitted only on termination of employment.
However, if the employer grants paid time off on bank holidays, in addition to the statutory minimum, the employee's potential right to a compensatory day off or pay in lieu in respect of a bank holiday will depend on the terms of the contract of employment or any policy on the matter that forms part of the contract. It may also be that a right to time off or pay in lieu of bank holidays exists impliedly as a result of custom and practice, even if it is not written down in any company documentation.
It is worth noting that, contrary to popular belief, there is no law that requires employers to grant employees paid leave on any public or bank holiday, even though many do so in practice.