Does an employee continue to accrue annual leave if they fall ill or are asked to stand down?

UK law entitles all full-time employees to 5.6 paid weeks, or 28 days, of annual leave (which can be inclusive of bank holidays). The entitlement can vary in terms of hours/days worked or any additional contractual agreements.

On the face of the WTR (Working Time Regulations Act) 1998, it appears that this leave accrues during a sabbatical, which would also apply if you were to stand down at work but remain employed. 

So, as long as the individual remains a worker, then their holidays will accrue.

This is why set holidays are so important, and flexible leave is discouraged.

Feel free to take a look here and here for more information concerning sick pay and leave pay.