What is annual leave?
Annual leave is a period of time that employees are entitled to take off work each year. In the UK, most employees have the right to 5.6 weeks of paid holiday per year, also known as statutory leave entitlement.
Learn more about what annual leave is in our guide.
How is annual leave calculated?
How you calculate annual leave will vary depending on employment contracts and company policies. However, as a rule of thumb, a full-time employee will accrue 2.33 days of annual leave for each month of service.
For part-time employees or those working irregular hours, the amount of leave they get is proportional to the hours they work.
As for calculating holiday pay, it will be based on the employee’s daily or hourly rate.
How employees accrue annual leave
An employee begins accruing annual leave from their first day of employment, no matter whether they've been hired full-time, part-time, or as a casual worker.
The standard legal minimum for full-time employees is 28 days per year (including bank holidays), pro-rated for part-time employees.
What does it mean to 'carry over' annual leave?
Carrying over annual leave is the process of transferring all, or part of, your unused holiday from the current leave year to the next one.
Essentially, if an employee does not take all of the days they're entitled to within a leave year, they can potentially 'carry over' the remaining days to the next year.
This policy makes sure that employees don't lose out on their leave entitlement due to various circumstances that may prevent them from taking a holiday.
When does the law require carry over?
The law permits employees to carry over up to a maximum of 20 days if they were unable to take annual leave due to reasons such as illness, or if they were on maternity or paternity leave. However, it's essential to remember that the specifics of these rules can be adjusted by individual employment contracts or company policies.
For instance, consider an employee who fell ill near the end of the leave year, leaving them with 10 unused days of annual leave. The law allows them to carry these over to the next leave year.
How is annual leave carried over?
The way annual leave is carried over can vary from one company to another, as it's mostly at the employer's discretion.
Some companies might ask employees to put in a formal request to carry over any leave they haven't used. Other companies may automatically shift any leftover leave into the next leave year. A common practice among employers is to allow a maximum of 5 holiday days to be carried over to the following year, automatically. This means that employees with more than 5 days of paid annual leave left in their allowance at the end of their leave year will only see 5 of them carried over the following year.
This system strikes a good balance between being flexible with employees who haven’t taken all their holiday allowance for the year, while still encouraging them to take time off throughout the year.
Can an employer refuse to carry over holiday?
The short answer is yes, but only in specific cases. An employer can refuse to carry over annual leave if:
They have a company-wide policy that doesn't allow for it
The employee requesting it isn't legally entitled to carry over holiday for an approved reason
However, they can't refuse if the employee couldn't take their leave because they were off sick or on maternity/paternity leave.
Wrapping up
The ability to carry over unused holiday is an important safeguard for employees. While company policies can vary, UK law provides a safety net to ensure employees don't lose their entitlement due to unforeseen circumstances. By clearly communicating your company's approach to annual leave, you can help your team manage their time off effectively, promoting a healthy work-life balance and a positive working environment.
Image from Unsplash published by jeshoots
