The European Court of Justice has held that pay in lieu of notice given to a worker who is dismissed without notice during part-time parental leave should be calculated on the basis of his or her full-time salary.
In HM Revenue and Customs v Stringer and others sub nom Commissioners of Inland Revenue v Ainsworth and others  IRLR 677 HL, the House of Lords held that a claim for unpaid holiday due under the Working Time Regulations 1998 can be brought as an unlawful deductions from wages claim under ss.13 and 23 of the Employment Rights Act 1996.
The House of Lords has held that workers, including those on long-term sick leave who have a claim for unpaid annual leave under the Working Time Regulations 1998 (SI 1998/1833), are entitled to bring claims before an employment tribunal not only under the Working Time Regulations 1998, but also under s.13 of the Employment Rights Act 1996, which gives workers the right not to have unlawful deductions made from their wages.
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.
HR and legal information and guidance relating to payments on termination.