Recent case (NHS Leeds v Larner [2012] EWCA Civ 1034 – 25th July 2012) has indicated that employees are to pay holiday pay as part of their termination payment even when they are prevented from taking the holiday owing to absence as a result of sickness.    In this case, the employer argued that they had the right to require the employee to take that leave at another time (i.e. when they are fit, so avoiding payment)

Refusal to make the payment will be an unlawful deduction from wages.

That said, the law is currently being reviewed and likely to change.