Recap: What Is Annual Leave?
Annual leave, often referred to as "holiday", is a period of time that employees are entitled to take off work each year. In the UK, most workers have the right to 5.6 weeks of paid holiday per year, also known as statutory leave entitlement.
👉 For all the details on annual leave, read our guide: What is Annual Leave: The Basics You Need to Know
How Employees Accrue Annual Leave
An employee begins accruing annual leave from their first day of employment, irrespective of their employment status—be it full-time, part-time, or casual.
The standard legal minimum for full-time employees is 28 days per year (including bank holidays), pro-rated for part-time employees.
👉 Find more detail on how employees accrue holidays.
How is Annual Leave Calculated?
The method for calculating annual leave varies depending on employment contracts and company policies. However, as a rule of thumb, a full-time employee accrues 2.33 days of annual leave for each month of service.
For part-time employees or those working irregular hours, the amount of leave is proportional to the hours they work.
As for calculating holiday pay, it will be based on the employee’s daily or hourly rate.
What Does Carrying Over of Annual Leave Mean?
Carrying over annual leave, or 'carry over holiday', refers to the process of transferring all or part of the unused annual leave from the current leave year to the subsequent one.
In essence, if an employee does not utilise all their entitled annual leave within a leave year, they can potentially 'carry over' the remaining days to the next year.
This procedure ensures that employees do not 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 annual leave days. The law allows them to carry over these days to the next leave year, ensuring they don't lose their entitlement due to circumstances beyond their control.
How is Annual Leave Carried Over?
The way annual leave is carried over can vary from one company to another, as it is 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 on 31st December will only see 5 of them carried over the following year. Conversely, employees with 3 annual leave days left in their allowance will have their full 3 days carried over.
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 book off their annual leave allowance 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 holiday carryover, or doesn't have a policy allowing for it, and
- The employee requesting it isn't legally entitled to carry over holiday for a reason such as sickness or being off on maternity/paternity leave.
However, they can't refuse if the employee couldn't take their leave because they were off sick or on maternity or paternity leave.
Covid-19 And Annual Leave Carryover: What Changed?
The pandemic brought a temporary change to the rules regarding annual leave carryover.
Due to the unprecedented circumstances, the UK government introduced a temporary law allowing employees to carry over up to 4 weeks of unused annual leave into the next two leave years. This was implemented to ensure that key workers wouldn't lose their leave entitlement due to the pressures of the pandemic.
Onfolk Makes Managing Payroll and HR Simple and Stress-Free
The benefit of combined payroll and HR software is that you save a ton of time on administrative tasks related to running your business while saving money on expensive accountants and HR consultants.
Onfolk is a modern, cloud-based platform built for startup founders and business owners employing a diverse team. Our platform combines HR software with almost fully automated payroll, so all your employee and pay data is in one place, accessible at all times.
As your employee data syncs automatically with your payroll, it takes just 3 minutes every month to run. This also means you only need to keep one system updated, ensuring your employee data and payroll are always free of discrepancies.
On top of being simple and fast to use, Onfolk provides you with other tools key to building your team effortlessly: a time-off management tool, 2-click employee onboarding and offboarding, customisable task lists, integrations with Xero, Quickbooks and your pension provider, fully customisable people metric dashboards and reports, and so much more.
If you use Slack to communicate with your team, Onfolk integrates with Slack too - get reminders for employee birthdays and anniversaries, as well as who is joining soon or on holiday that week.
Running a business comes with many responsibilities - Onfolk takes care of payroll and people adminfor you, so you can focus on growing your team and business instead.
Recap: What Is Annual Leave?
Annual leave, often referred to as "holiday", is a period of time that employees are entitled to take off work each year. In the UK, most workers have the right to 5.6 weeks of paid holiday per year, also known as statutory leave entitlement.
👉 For all the details on annual leave, read our guide: What is Annual Leave: The Basics You Need to Know
How Employees Accrue Annual Leave
An employee begins accruing annual leave from their first day of employment, irrespective of their employment status—be it full-time, part-time, or casual.
The standard legal minimum for full-time employees is 28 days per year (including bank holidays), pro-rated for part-time employees.
👉 Find more detail on how employees accrue holidays.
How is Annual Leave Calculated?
The method for calculating annual leave varies depending on employment contracts and company policies. However, as a rule of thumb, a full-time employee accrues 2.33 days of annual leave for each month of service.
For part-time employees or those working irregular hours, the amount of leave is proportional to the hours they work.
As for calculating holiday pay, it will be based on the employee’s daily or hourly rate.
What Does Carrying Over of Annual Leave Mean?
Carrying over annual leave, or 'carry over holiday', refers to the process of transferring all or part of the unused annual leave from the current leave year to the subsequent one.
In essence, if an employee does not utilise all their entitled annual leave within a leave year, they can potentially 'carry over' the remaining days to the next year.
This procedure ensures that employees do not 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 annual leave days. The law allows them to carry over these days to the next leave year, ensuring they don't lose their entitlement due to circumstances beyond their control.
How is Annual Leave Carried Over?
The way annual leave is carried over can vary from one company to another, as it is 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 on 31st December will only see 5 of them carried over the following year. Conversely, employees with 3 annual leave days left in their allowance will have their full 3 days carried over.
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 book off their annual leave allowance 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 holiday carryover, or doesn't have a policy allowing for it, and
- The employee requesting it isn't legally entitled to carry over holiday for a reason such as sickness or being off on maternity/paternity leave.
However, they can't refuse if the employee couldn't take their leave because they were off sick or on maternity or paternity leave.
Covid-19 And Annual Leave Carryover: What Changed?
The pandemic brought a temporary change to the rules regarding annual leave carryover.
Due to the unprecedented circumstances, the UK government introduced a temporary law allowing employees to carry over up to 4 weeks of unused annual leave into the next two leave years. This was implemented to ensure that key workers wouldn't lose their leave entitlement due to the pressures of the pandemic.
Onfolk Makes Managing Payroll and HR Simple and Stress-Free
The benefit of combined payroll and HR software is that you save a ton of time on administrative tasks related to running your business while saving money on expensive accountants and HR consultants.
Onfolk is a modern, cloud-based platform built for startup founders and business owners employing a diverse team. Our platform combines HR software with almost fully automated payroll, so all your employee and pay data is in one place, accessible at all times.
As your employee data syncs automatically with your payroll, it takes just 3 minutes every month to run. This also means you only need to keep one system updated, ensuring your employee data and payroll are always free of discrepancies.
On top of being simple and fast to use, Onfolk provides you with other tools key to building your team effortlessly: a time-off management tool, 2-click employee onboarding and offboarding, customisable task lists, integrations with Xero, Quickbooks and your pension provider, fully customisable people metric dashboards and reports, and so much more.
If you use Slack to communicate with your team, Onfolk integrates with Slack too - get reminders for employee birthdays and anniversaries, as well as who is joining soon or on holiday that week.
Running a business comes with many responsibilities - Onfolk takes care of payroll and people adminfor you, so you can focus on growing your team and business instead.
