Employees and workers (workers include zero hours/casual workers) are entitled to annual leave, but most employers are not aware of where this entitlement comes from.
The right to take annual leave in the UK comes from the Working Time Regulations 1998 and is made up of two parts:
1. A basic 4-week (20-day entitlement): this portion of annual leave is derived from European law.
2. An additional entitlement of 1.6 weeks is derived from UK domestic law
The distinctions above are relevant when determining when annual leave can be carried over.
It depends on the reason why someone has not taken their annual leave within that holiday year as to whether the employer must allow them to carry some or all of their leave over and how long they have to take it.
Employees accrue (build up) their holiday entitlement as normal when they're off work because of sickness or injury. Where an employee has been unable to take their annual leave due to sickness, usually in the event of long-term sickness (absent for more than 4 weeks), their basic annual leave (4 weeks/20 days) will be carried forward into the next annual leave year and should be taken within 18 months of the end of the annual leave year in which the leave accrued (unless the employer allows more than the basic leave to be carried forward).
This includes maternity leave, adoption leave, shared parental leave, parental leave, paternity leave, and parental bereavement leave.
Under these circumstances, the statutory 28-day annual leave should be carried over into the next holiday year.
Please note: A payment in lieu of accrued statutory annual leave is not permitted unless the employee is leaving their employment as this would mean that the employee had not been able to take their statutory entitlement which is unlawful.
The employer has a duty to recognise the right of their workforce to take paid annual leave and receive paid holiday pay, but the employer must also give their employees a reasonable opportunity to take their annual leave and encourage them to do so.
Where the employer fails in any of these regards, the employee can carry over their basic 4 weeks of annual leave into the next annual leave year.
The best way to avoid this problem is to ensure that this scenario does not occur in the first place, as per the ‘top tips’ section at the end of this guide.
Your employees contracts of employment will state a minimum holiday entitlement of 5.6 weeks.
Most contracts of employment do not set out differences between basic and additional types of annual leave, not least because this will be very confusing but because the overall statutory entitlement is 28 days/5.6 weeks.
This distinction is usually only relevant when considering whether annual leave should be carried over or not.
Employers who provide annual leave entitlements over and above 5.6 weeks often place limits on the amount of leave that can be carried over into the next holiday year or state that in the event of certain types of dismissal, e.g., for gross misconduct, the employee will only receive payment in respect of untaken statutory annual leave. Employee handbooks and relevant policies may set out how more than 5.6 weeks annual leave will be managed.
When considering whether you should allow an employee to carry over all or some of their holiday entitlement, employers should always seek HR advice so that contracts and any other relevant agreements can be considered.
Employers often think that setting out the annual leave entitlement in the contract of employment is sufficient, and if an employee doesn’t book it, they lose it. There is a certain amount of responsibility on employees to book their leave, and of course, if they fail to do so without good reason, they will certainly ‘lose it’. Again the employee handbook should explain the procedure for booking holidays and employees responsibility.
1. Employee handbook/annual leave policy: Have a clear system and set of rules for employees that are communicated at the start of their employment and at periodic intervals. Including these in handbooks and/or policies is an effective way of doing this.
2. Reminders: Writing to employees throughout the year to remind them they need to book their leave, or it will be lost. Telling them the leave will be lost is very important, as is informing them that their right to pay for such a holiday will also not apply. If sending reminders by email, keep a copy of the email and add 'read receipts’.
If issuing reminders in employee meetings, take meeting minutes, showing who was there, and ensure those who are not in attendance are given copies of the minutes
3. Avoid unreasonable notice periods for booking annual leave or heavily restricting the number of employees allowed off at any one time. For example, it is not reasonable to insist someone give one month’s notice to book one day off. Likewise, if you are too restrictive on the number of employee you allow off, you will end up with a situation where your employees cannot take all of their leave in the annual leave year.
4. Ensure that all employees are aware of the rule regarding booking and authorising annual leave and that managers apply them fairly and reasonably.
And finally, as always, this is a guide and not a substitute for taking advice ; Please contact The HR Branch about any of your holiday queries
