Use it or lose it? Not always! When you can carry-over leave

Are you a ‘book it all in as soon as you’re allowed’ kind of person, or a ‘forget all about it then panic book whatever days are left’ type? Or, the worst possible option, not book it at all. What happens then? 

Generally, once the calendar ticks over to the next leave period, if you’ve not used your statutory leave allowance (5.6 weeks a year in the UK) then sadly… those paid days off are gone forever. 

But some employers will allow a portion of annual leave to be carried over into the next period, and there are a few situations in which the law allows you to do this regardless of company policy. Whether or not this is a good idea is up for debate, as there are benefits of both a strict ‘no carry over’ policy and to a more flexible approach.

Table of Contents

• Pros and cons
• Legal framework 
• Why so strict?
• So taking leave is great – why wouldn’t you do it?
• Key takeaways

Pros and cons

As an employer, whether or not you want to let people carry some leave over into the next year really comes down to what you and your staff value most. It means planning ahead is harder, and an accumulation of unused leave can create liabilities that make life and budgeting tricky. On the other hand, it offers staff some added flexibility that helps to accommodate the unexpected, which might improve staff satisfaction and retention. 

For the worker, being able to carry over leave would create the potential for longer holidays, perhaps a dream trip, or just an extended break to explore a personal interest. It would also give you extra leeway to adjust to life’s unknowns, of which there are many! But these benefits create a temptation or, arguably, an incentive to not take time off, even when you might really need a break. In one-off situations this might be OK. 

For most it is not a sustainable way to work and live in the long-term, and could be a recipe for burnout if you’re always pushing leave back because something has come up. This could lead to a longer period of absence in the future due to stress or ill health caused by over-work, so you must ask whether what you gain is worth it. You are also giving up something that you are entitled to by law – even if you’re allowed to carry over some leave, for a set period of time, there will still be a timeframe and you risk losing it altogether.

Legal framework 

As of January 2024, the rules on carrying over leave have changed a bit, yet many are still not aware of them. It’s important for employers and employees alike to know when this applies – for employers, to remain compliant and maintain a fair and healthy work environment; for employees, to ensure they’re getting their full leave entitlement and not compromising their health and wellbeing. 

The rules are a combination of EU legislation and UK law. The EU mandates that all workers get 4 weeks of annual leave, and UK law adds another 1.6 weeks of statutory leave, taking us to a total of 5.6 weeks of holiday per year. Workers must take at least four weeks’ holiday per year, and this cannot be carried over simply because it hasn’t been used up. 

Some employers may allow 1.6 weeks to be carried into the next year, but this is purely down to company policy. You’ll have to check your leave policy to see if and when this is possible, and how to go about it.

In terms of the 4 weeks minimum, this cannot be carried over (except in specific legally protected situations – more on that later) and the employee must use it. But it’s not only down to them. The employer, too, has an obligation to enable, promote and facilitate the use of this holiday time. If a team member isn’t booking any leave, the boss can’t just sit quiet and hope they forget about it. They must remind, prompt and set a good example by leading from the front and being vocal about booking their own leave. Presenteeism serves no one, at any level of an organisation.

Why so strict?

Generally, the weight of legislation is behind not allowing or encouraging annual leave to be carried over, with only limited scope for this to be done legally. These regulations are in place because the UK recognises the critical importance of rest time and holiday time for health and wellbeing.

While a ‘use it or lose it’ policy might seem harsh, it’s really anything but. You’re basically being forced to take regular time off, which we know is important for both productivity and work–life balance. A better focus to have is on how to make the most of your leave by:

• Planning and booking it in advance – especially if you take our advice on leave stacking!
• Communicating with your manager and with your team about leave dates, schedules and workloads to remove barriers to taking leave
• Understanding that annual leave should be used for regular rest and relaxation, not to deal with emergencies or when you’re about to drop!

So taking leave is great – why wouldn’t you do it?

Now you might be in the category of people who are thinking, “Who on earth isn’t using up all their leave?! We work to live, not live to work!” If so, we can only commend you on your proactive approach to work–life balance and/or how on top of your life admin you are! But there are many reasons why a person might be unable to take all of the leave they’re entitled to. It’s not always absentmindedness, an all-consuming love of work, or presenteeism, but often something a bit trickier. Common reasons for unused annual leave are:

• Heavy workload or staff shortages
• Unforeseen circumstances (illness, a family emergency)
• Lack of awareness
• Pressure or culture
• Use of other forms of leave – parental leave , stress leave , longer term sick leave

Some of these we’ve already discussed, and are not good reasons for unused leave. A work culture where there is pressure to be always putting in face time and ‘going the extra mile’ by not taking time off, is not a healthy one. Equally, if leave policies aren’t well communicated and their use not encouraged, you’ll have people powering through feeling stressed and tired unaware that they could take a paid break. This is terrible for morale and productivity and only leads to one place – burnout. 

Yet there are situations where failing to use your leave is understandable, and in these cases the law allows for some leave to be carried over. As we explained, there are 4 weeks protected annual leave that cannot legally be carried over out of choice or due to forgetting to take it, whatever the company policy is for the rest of the holiday allowance on offer. However, in specific situations, these weeks can be carried over:

• Inability to take all or part of your annual leave due to taking another form of statutory leave (eg maternity leave) – in which case you can carry over all 5.6 weeks
• Inability to take annual leave due to being off on sick leave (can carry over up to 4 weeks)
• Inability to take annual leave because the employer fails to: recognise a worker’s right to annual leave; give them reasonable opportunity or encouragement to take leave; inform the worker of the loss of unused leave by the end of the leave year

Key takeaways 

The changes to the rules don’t mean you can go full nose to the grindstone for 18 months, hoarding all your annual leave and then hopping on a flight to Barbados to disappear for six weeks. And rightly so – leave is accrued over time for a reason, and we shouldn’t incentivise people to stash it. For one thing, it’s a pain for planning staffing levels, but it’s also not a healthy approach to work and life. If you’re a full-time, permanent employee, you should be taking regular breaks throughout the year to manage stress levels and avoid burnout. Part of management’s role is to promote and encourage this.

For employers, it’s important to have clear policies in place about carrying over leave setting out when this is allowed and within what limits. There are times when you will need to allow it, even if it’s not policy, so you need to be up to date on the law. 

Good leave management software that makes it easy to plan, request and book annual leave will not only encourage people to use it, but make it easier for you to track and manage staff leave too!