An employee who is on long-term sickness absence may wish to book a period of annual leave in order to receive full pay for that period, for example if they have exhausted all entitlement to sick pay or they are only receiving statutory sick pay.
The law does not prevent employees from taking annual leave while on sickness absence. It would usually be in an employer’s interests to agree to an employee’s request to take annual leave, to avoid them accruing significant amounts of leave while on sickness absence. If it refuses the request, the employer would have to allow the employee to take the accrued annual leave on their return to work (even if this means carrying it over to the next leave year as this is one of the exceptions to Q2 above), or pay the employee the accrued holiday pay on termination of employment.
There is also a risk that the refusal of a request for annual leave when the employee is already absent from work could be a breach of the implied contractual term of “mutual trust and confidence”. The employer would not be able to argue, as it may be able to do if the employee was in work, that it had to refuse the request in order to maintain staffing levels.