Most commonly, the leave year runs from January until December for employees. For those granted the basic four weeks guaranteed under European law, it’s a case of use it or lose it.

But what if an employee is unable to take annual leave? Should employees expect to be able to carry it over into the following year, and must you as employers allow this?

The simple answer would be no. Under European law, even if you and your employee are in agreement, carrying leave over is contrary to regulations. However, you can agree to additional leave – whether that be extra contractual leave, which is granted by many employers, or a further 1.6 weeks under UK regulations.

In addition to this basic framework however, there are further exceptions which should also be considered depending on employee circumstances. Here they are.

Sickness

If an employee is unable to take annual leave due to sickness, you must allow them to carry it over into the following annual leave year. The courts state that sick leave and holidays have different functions, so an employee cannot be compelled to take holiday while recuperating from illness.

Maternity leave

When an employee is on maternity leave she accrues holiday. If the maternity leave takes her into the following leave year, all of the accrued leave can be taken then. If the maternity leave falls in this way, the holiday is normally taken in one go immediately upon the employee’s return to work, though other arrangements can be agreed.

When matters become complicated

Things become less clear for matters which could affect an employee’s ability to take leave. An example of why it is so important for employees to understand their holiday entitlements is the 2014 Sash Windows v King case, which raises the issue of whether the employee is unable or unwilling to take leave for reasons beyond their control.

In this case, the claimant had worked for the business in question on a commission only basis for 14 years. During this time he wasn’t paid for holidays. The claimant brought a complaint of unpaid holiday pay under the Working Time Regulations (WTR). The complaint included entitlement to pay for holiday that had not been taken prior to that year, claimed as a series of unlawful deductions from wages on a regular basis.

It was held that the employee was not prevented from taking the leave simply because he was not being paid for it – he had in fact taken some leave during that period and was free to take more, despite such a decision if taken leading to a drop in pay.

It can be assumed that if the employer simply didn’t allow the leave, the employee could carry it over. But what if the employee was scared to ask for leave?

In the recent Shannon V Rampersad & Rampersad case that is exactly what the employee claimed. The claimant was a night care assistant working in a home. After the WTR had been introduced in 1998, the claimant no longer took holidays, and appealed against the conclusion made that he could not carry forward his paid leave entitlement of £15,000 in lieu of holiday pay.

He claimed he had not previously put in a complaint as he was too scared of upsetting the care home’s previous owner. The employment tribunal, however, did not accept he was too scared to ask for leave. The appeal was dismissed as it was concluded that the facts did not support the view that the claimant was unable or unwilling to take leave due to reasons beyond his control.

Accordingly, they did not need to make a finding on the matter. However, the Employment Appeal Tribunal indicated that if it had been accepted that the employee was too scared to ask for leave, it may well have been the case that the employee would have been allowed to carry the leave over.

In any event, it is clearly important to ensure your employees are comfortable requesting holiday, and, generally speaking, are clear on their rights and your company rights. This will help ensure their expectations are managed. In summary, here are some key points to take into account.

The rules you should consider

1. The WTR state that employees’ notice of an intended holiday should be twice the intended duration of the holiday – for example, a week’s break requires two weeks’ notice. That said, should you choose to, you can accept less notice.
2. You can refuse holiday if it’s inconvenient – in which case the employee must be told at least as long before the holiday as the holiday was due to last – so two weeks prior to the holiday start date if the holiday was to be taken over two weeks.
3. You may request that an employee takes holiday at a particular time – in this situation, notice must be twice the intended leave duration.
4. You can’t request that employees take annual leave at a time when they genuinely couldn’t work – for example (for many workplaces), the weekend.
5. There are few formal requirements for these holiday notices, but it may be sensible to have clear rules on the matter to avoid dispute.
6. During the first year of employment, the ‘accrual provisions’ govern the amount of leave that the employee may take, meaning 1/12th of the year’s leave is accrued at the beginning of each month. Those provisions are to assist you in preventing new employees from taking all of their leave at once, though of course the notice provisions also assist with that.
7. Finally, you must pay employees during their holidays. If they are normally paid commission or overtime, this must be considered.

Clarity on holiday pay is an especially important topic at this time of year, as many employees look to plan their hard earned breaks throughout the year.

By properly understanding the laws around holiday pay, employers can ensure a clear and open dialogue exists with their employees – helping to decrease the chances of confusion over holiday entitlements.

Raphael Prais is a lawyer at LHS Solicitors. 

Further reading on holidays

• Helping your staff switch off on holiday