The Impact of Brexit and COVID-19 on Holiday Entitlement

July 5, 2021

Most UK workers are entitled to 28 days annual holiday, which includes bank holidays. However, in regular times only a proportion of this can be carried over to the following year. Thus, in most situations, it is a case of “use it or lose it”; if you fail to take your annual holiday, then it is your loss, and you are not entitled to financial compensation.

Brexit and COVID-19 have both impacted these rules. For instance, employees who have failed to take all their statutory leave because of COVID-19 can now carry it over for the following two leave years. However, a previous ruling by the Court of Justice of the European Union (CJEU) placed additional requirements on employers to provide workers with accurate information on their outstanding leave, encouraging them to take it in the current year. Employers face financial penalties if they fail to do so. These requirements could change post-Brexit.

Here we look at the implications of these measures and how they emphasise the importance of deploying a leave management system and employee leave planner that provides accurate, up-to-date information on outstanding leave.

Statutory leave entitlement

UK law stipulates that full-time workers are entitled to a minimum of 5.6 weeks paid holiday a year. Part-time workers receive a pro-rata entitlement. Four weeks of this leave relates to EU law, with the additional 1.6 weeks being a UK entitlement. Only under exceptional circumstances are UK employers obliged to allow workers to carry the four weeks forward.

Ruling by the CJEU

In a landmark ruling, the Court of Justice of the European Union (CJEU) examined the legality of German employment laws. Under those laws, workers were entitled to financial compensation for untaken leave only if they had been prevented from taking leave after having previously requested it. The CJEU ruled that employers must not discourage workers from taking their due leave and must also:

· Update workers on their outstanding leave

· Provide accurate information regarding their lack of entitlement or otherwise to carry that leave forward in good time for them to take leave in the current year

· Inform them of when their entitlement to leave ends

· Encourage workers to take their annual leave.

By failing to comply with these rules, employers would lose the right to prevent workers from either carrying leave forward or claiming pay in lieu of untaken leave. This ruling applied across the EU, which at the time included the UK.

The impact of Brexit

Before Brexit, the CJEU ruling meant that any UK employers who fail to comply with these rules could not continue to prevent workers from carrying leave over. Furthermore, employers must take positive action to encourage workers to take their leave allowance. For instance, they could write to workers to inform them of outstanding leave, encouraging them to take it, and investigate why workers might have failed to take their due leave. For instance, if this was the result of pressure from their line managers.

Now that the UK has withdrawn from the CJEU, how will this impact annual leave regulations? It is improbable that any government would depart from all European Directives on worker rights. But there is likely to be a degree of divergence eventually.

Apart from the rules relating to carrying over leave, EU law states that workers on maternity or long-term sick leave can carry over their annual leave to the following year. Additionally holiday pay should include overtime payments and commission. Both of these would appear unpopular amongst employers. It was mooted that the government was considering repealing the inclusion of overtime in holiday pay and the requirement to record and report on workers’ hours. However, business secretary Kwasi Kwarteng confirmed to parliament that there are no government plans to reduce worker’s rights. For the time being, and until the impact of COVID-19 is behind us, any review of employment rights is on hold.

COVID-19 rules on carrying annual leave forward

As we have stated, workers who have not taken all of their statutory annual leave because of COVID-19 can now carry it over into the following two leave years. While the motivation behind this measure is to ensure that staff can work on the national fight against COVID-19 without losing their holiday entitlement, it also relieves pressure on employers to ensure workers take their leave during the year in which it’s due.

However, this easing of regulations comes with several caveats. The new regulations apply only to workers for whom it is “not reasonable” to take leave because of COVID-19, and this is open to interpretation as many factors are involved.

It would appear that the bottom line is that employers should continue to encourage workers to take annual leave when it is due and that workers should continue to request leave throughout the holiday year. When leave is carried forward, it should be taken at the earliest opportunity.


These measures and interpretations underline the need to maintain up-to-date, accurate information on outstanding leave. All stakeholders, including employees and HR, must have ready access to this information, especially when working remotely. For instance, this could be provided via an online staff leave planner. Ideally, employees should be informed automatically about their remaining leave allowance so that they can take appropriate action in good time and not miss out on their entitlements.