SI writes: One of my employees has been off sick for the past three weeks. She has been paid statutory sick pay and is asking whether she can take the last seven days as annual leave. Do I have to agree? The interaction between holiday leave and sick leave has been a confusing issue for employers, writes Peter Done, managing director of Peninsula, though recent employment law cases have produced some clarity. There are no legal boundaries on retrospectively converting sickness absence to annual leave and whether you allow this depends on what is in your contracts of employment. If there is no mention in the contracts, you need to consider whether you have allowed this for employees previously. If the issue has never arisen before, you may still choose to allow it but bear in mind that you may be setting a precedent. If you do allow it, you should give the employee holiday pay in the normal way. There are business advantages to employees using annual leave to cover their sickness period. Though, initially, this is a greater cost than statutory sick pay, the using up of holiday leave during sickness will mean the employee is not entitled to this leave at a later date. This means employers will not have to pay for two sets of leave — the current sickness leave and future holiday leave — and so the cost will be lower over the whole of the leave year. Some companies operate a sell- back system that allows employees to sell any annual leave that is in excess of the statutory minimum and receive their normal pay for it. Employees may use the sell-back system to top up their pay when they have been off sick, but if this happens, employers should insist that, although holiday pay has been paid, the absence will still be marked as sickness and therefore can count towards any sickness thresholds at which disciplinary action is bought. Employees who are on annual leave and want to convert it to sickness leave will need to follow company sickness notification procedures, but if they do, the law says this should be classed as sickness absence. For further advice and clarification please contact Peninsula on 0844 892 2772.