Annual Leave Entitlement – What do you do with carryover?



Do you have your accrued annual leave booked off for the upcoming holiday season? Yes, it’s that time of year again, Halloween and Bonfire Night have been and gone, which means the countdown to Christmas has begun! 

And if your holiday year runs from January to December, it’s time to check how much holiday entitlement your employees have left to take before the year ends. Do you allow any carrying over of annual leave?




Carrying over annual leave entitlement – is it an employee’s right?  

No, not in every case.  

Annual leave is covered by the Working Time Directive, so by law, your employees must take 5.6 weeks of annual leave each holiday year.  

If you permitted extra bank holidays for the Queen’s Jubilee and funeral, then you could allow your employees to carry over the same amount into 2023.  

If you give your employees more than 5.6 weeks of leave (also known as contractual holiday entitlement), you could allow them to carry over their contractual entitlement.  

Those who are on Maternity, Paternity or Parental Leave or those on Long Term Sick are an exception and their holiday should always be carried over. 



Are there any reasons why I shouldn’t allow employees to carry over annual leave entitlement? 

Yes, there are a number of reasons: 

  1. Carrying a holiday over can create a snowball effect! If they were unable to take their annual leave this year, then what is the likelihood they will be able to take next year’s leave, plus any days that are carried over? 
  2. Holidays are to be paid out at the pay rate that the employee is on when they take their leave. This means you are paying out more if the employee has had a pay increase since they accrued the leave. 
  3. As employees accumulate holidays, you risk having to pay the holiday entitlement out should they leave the organisation. 


Is there any compromise? 

Yes, you can limit the days carried over to the minimum and define a period in which they must be taken. For many, this will be before the end of the first quarter in the next holiday year. 


What other options do I have? 

  • You can impose holidays by giving twice as much notice as the period you are wanting them to take. 
  • Ask your team to book their holidays before the end of the year. 
  • You could pay out untaken but accrued contractual holidays (note this can not be done for the statutory 5.6 weeks) 
  • If you already have this written into your holiday policy, you can stick to the rule that annual leave not taken is lost.


How can we help?

If you would like to review your statutory policies, we can help! Get in touch with our friendly team to find out more.

Book a call with Kate Underwood HR