Every manager and HR specialist will have to deal with a holiday or annual leave carryover issue. The idea is that employees can carry forward any annual leave they haven’t taken in one leave year into the next leave year.
Sounds simple enough, right? And it is. But when dealing with holiday carryover, there are a few things you need to bear in mind to ensure that everyone’s treated fairly.
We’ll take a quick look at what UK law says about the issue, before offering some advice on how to implement a holiday carryover issue that’s best for your organization.
Can Employees Carry Forward Annual Leave Allowance?
One reason why many employers find themselves confused about holiday carryover is that there are no clear UK laws to govern the issue.
In UK employment law, almost all workers are legally entitled to 5.6 weeks’ paid holiday a year. This is known as statutory leave entitlement or annual leave. The law applies to all kinds of workers, including agency workers, those who work irregular hours, and those who work on zero-hours contracts.
For a full-time worker, this 5.6 weeks’ paid holiday usually extends to 28 days of annual leave a year. If you want to give your employees more leave each year, you can. But you cannot give them any less. It’s also up to you whether you include UK bank holidays in this statutory leave entitlement.
So far, so good. The problem is, UK law doesn’t offer any clear guidelines on what to do should an employee have untaken leave remaining at the end of the leave year. If an employee reaches the end of the year and they still have three days leave left to take, can they carry those days into the next year?
The short answer is – it’s up to you.
Before we discuss the pros and cons of letting employees carry untaken leave into the next year, let’s take a look at an area where the law is a little clearer.
Annual Leave Carry Over and Other Types of Leave
Sometimes employees may be prevented from using all of their statutory leave in the space of the year. This could be due to a period of long-term sickness absence, or as a result of another type of leave, such as maternity or paternity leave.
If an employee, for whatever reason, is unable to take their full leave entitlement in the space of a year, they have a legal right to carry forward up to four weeks’ leave into the next year. The only stipulation is that this carried-over leave must be taken within 18 months.
Again, beyond these legal requirements, it’s entirely up to you how you manage holiday carryover in your business. You can let employees carry forward as much leave as they want, or you can prohibit them from carrying over any leave at all. It’s completely up to you!
So to help you devise a workable holiday carryover policy for your business, let’s weigh up some of the pros and cons.
Is Holiday Carry Over Right for Your Business? The Case Against
Employees need to take a break now and then. It’s good for their health, their mental wellbeing, and ultimately, their productivity. Yet studies show that far too many employees don’t use up their entire annual leave entitlement each year. Why? Because they feel like they’re too busy to ever take a break.
If employees are allowed to carry over any untaken holiday into the next year, these workaholics may simply decide to indefinitely defer their breaks until they’re “less busy”. But of course, they’ll never be less busy. And if they work flat out without taking an adequate break, they risk stress, anxiety, and burnout.
Also, a holiday carryover policy could prove costly. The worst-case scenario is that a long-term member of staff builds up a huge amount of untaken leave over the years, and one year they decide to take it all off in one go. Could you afford to spare this veteran member of staff for a few months? Would the rest of the team be able to cope without them?
This situation may never arise, of course. But a lot more likely scenario is that multiple members of your team decide to carry over their holiday leave into the next year. If you have to account for statutory leave and untaken leave in a space of a year for multiple members of staff, you may struggle to plan for projects and find cover for periods of leave.
The Business Case for Annual Leave Carry Over
A generous holiday carryover policy could help some employees plan for big projects and exceptional circumstances. They might be planning for a baby or considering a house move. Or they may decide to finally take that epic trip they’ve been dreaming about their entire life.
Letting employees carry over the holiday from one year into the next gives them the flexibility to plan for these life-changing and life-affirming events. Giving your employees this sort of freedom can be great for morale, motivation, engagement, and productivity.
Finally, a holiday carryover policy could help your business avoid difficult periods of the holiday rush. This often happens come December, as all the employees with untaken leave request to take their time off in the same period. You may struggle to accommodate so many leave requests in such a short space of time, and productivity could slow during any period where multiple members of staff are absent.
But if employees are allowed to carry over holiday into the next year, there won’t be so much pressure come to the end of the year. Rather than causing a logistical nightmare for the business, employees with untaken leave could simply save their leave for a less hectic time of year.
Is Holiday Carry Over Right for Your Business?
You’ll have to take the time to weigh up the pros and cons. Your specific holiday carryover policy will largely depend on the size of your team, and how well the rest of the team will be able to cope when not operating at full capacity.
But whatever you decide to do with holiday carryover, you can make life considerably easier for yourself with our annual leave software.
The Edays system lets you define your company’s holiday carryover rules. It will then carry over a set number of days each year – whatever you decide is fair. For example, if an employee has 10 days of untaken leave, but your policy allows them to carry over a maximum of five days, Edays will automatically add five days to their holiday allowance in the next year.
Simplify carry-over for your organization. Book a free Edays demo to see for yourself just how easy our system is to use.
Katrina is edays' own People Director with significant UK and international experience in delivering people strategy and value-adding HR solutions across a range of organisations and sectors (including Arriva, Boots, Rolls Royce, the utility and charity sectors). Katrina has over 20 years of experience in Human Resources and is CIPD qualified.