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News added on 16.12.2019

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What rights do employees have to carry over unused annual leave into a new holiday year?

The end of the 2019 calendar year also marks the end of the latest holiday year for many employers and their staff. If your holiday year is coming to an end, what is the current legal position on annual leave carry-over into the new 2020 holiday year?

According to a new report by BrightHR, 77% of UK workers with a calendar holiday year still have some of their annual leave allowance remaining this year and 59% of these have “no option” to carry it over to next year. If your business is heading towards the end of your 2019 holiday year, make sure you have reminded your staff to use up their remaining annual leave entitlement.

Some employers operate contractual rules enabling employees to carry a limited amount of unused annual leave over from one holiday to the next, e.g. three or five days, often with the condition that any leave carried over must be used within two or three months of the start of the new holiday year. Other employers don’t allow any annual leave carry-over and so the unused leave is lost.

The current legal position on annual leave carry-over is as follows:

  • the statutory four weeks’ annual leave entitlement provided by the Working Time Directive (now set out in regulation 13 Working Time Regulations 1998 (WTR)) cannot be carried over to the next holiday year in ordinary circumstances and must be used during the holiday year in which it arises
  • you can agree in writing, e.g. in the employment contract, to allow your employees to carry over the additional 1.6 weeks' statutory annual leave entitlement set out in regulation 13A WTR (or part of it), and any further contractual leave, but you are not required to do so
  • if, however, an employee has been unable to take their annual leave because of sickness, case law has held that they can still carry it over, but this right of carry-over is limited to the four weeks’ annual leave entitlement
  • if an employee has been unable to take their annual leave because of maternity leave, again they can still carry it over but, in this situation, they can carry over the full 5.6 weeks’ annual leave entitlement
  • according to case law, you are required to actively encourage employees to take their annual leave before the end of the holiday year and warn them in good time of the risk of losing it if they don’t. If you have failed to do this, i.e. you haven’t given employees the effective opportunity to take their annual leave, they may not automatically lose four weeks of their statutory entitlement at the end of the holiday year, so it can then carry over into the next holiday year.

The general rule is that an employee can’t carry over four weeks of their annual leave entitlement, but you can agree in writing that they can carry over any annual leave in excess of this, but you don’t have to do so. Exceptions to this general rule apply where the employee wasn’t able to use their annual leave due to sickness absence or maternity leave. However, there is another important exception and that applies if you haven’t given your employees an effective opportunity to take their annual leave, in which case they can then carry over four weeks of their leave entitlement.

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