It is possible to carry over leave for an employee who has not taken it, but what are the rules, and how do you do it?
There are many good reasons, as we’ve talked about on this blog before, for encouraging staff to use up their holiday entitlement before the end of their annual leave year. Taking holiday boosts staff welfare and productivity, as well as improving morale and retention. Another strong reason to encourage employees to take time off is to avoid having to carry over leave. Taking remaining holiday entitlement from one year during the next can be done in certain circumstances, but it can be complex and time-consuming to work out, as well as playing havoc with your payroll cost forecasts.
Cut to the chase, what’s the short version?
Employers cannot force staff to carry over leave to the next year instead of taking it. If an employee has leftover entitlement they may carry over a certain amount, if there is a written agreement between them and the employer (e.g. in their employment contract) that says they can. For most UK staff that maximum amount is 8 days. In some situations, the amount may be higher.
Why so complex?
The complication of only being able to carry over a certain number of days comes about because the legal right to leave comes from different sources. The European Working Time Directive (WTD) gives all employees the right to 4 weeks paid leave (20 days for a full-time worker) each year. The additional 1.6 weeks (8 days) in the British entitlement comes about from UK law. The WTD says that leave cannot be carried over, this affects 20 days of the entitlement cannot. UK law allows staff to carry over leave as long as there is a written agreement, meaning that the 1.6 weeks (8 days) can be carried over. The 8-day limit is set out in UK law, so Brexit will not immediately affect it unless the UK government changes the law.
In addition, remember that if your staff has a holiday entitlement that goes beyond the legal minimum (a contractual leave entitlement), whether or not this can be carried over will depend on your contracts of employment or other written agreements. The best approach is to make sure your policies on the subject are clearly communicated, via the staff handbook or intranet. It is of course important to make sure you treat employees equally and fairly.
Ok, got it. That’s not too complicated.
Once you understand the basic rule, watch out for the exceptions. Under WTD the employee has a right to carry over leave (i.e. the 20 days) if they are prevented from taking it by something outside of their control, such as sickness. Confusingly this does not apply to the UK-only entitlement (the 8 days) or to any contractual entitlement (over the 28 days). This article gives a more detailed summary of the differences.
Another exception that applies only to the WTD allowance comes as a result of a case in the European court. This says that if the employer does not encourage the employee to take all of their leave entitlement, then the worker is entitled to carry over leave to the next year. This offers yet another reason to make sure staff take their holiday. LeaveWizard users have the option of setting up regular email reminders to employees, offering peace of mind on this front.
So I understand the rules. How do I carry over leave?
If the employee is entitled to carry over leave to the next year, you will need to check how much they can carry over (8 days or their remaining allowance if it is less) and add that to the new year’s entitlement. They can then book the leave as normal, or you might insist they take it at the beginning of the year.
One way to make sure that the calculation is done right, and that you stay within the law, is to use dedicated leave management software. Users of LeaveWizard’s customisable online annual leave management platform can carry over leave for employees with just a few clicks. If you are already a LeaveWizrd client you can see how to do this in this Knowledge Base article. If not, why not see how we can help you with this and so much more, by booking your free online demo?