Carrying annual leave into future leave years

A full-time working employee is entitled to a statutory minimum of 28 days holiday each year.  Ordinarily the legislation splits this entitlement to statutory holiday into 20 days and 8 days, and there are some differences in the rules that apply:

• the 8 days can be carried forward into the following leave year if a written agreement exists between the worker and the employer
• generally, the 4 weeks cannot be carried into future leave years, so employers must facilitate these weeks being taken within the relevant leave year

The Government has passed new emergency legislation to ensure businesses have the flexibility they need to respond to the coronavirus pandemic and to protect workers from losing their statutory holiday entitlement. 

Where it has not been reasonably practicable for the worker to take some or all of the 4 weeks’ holiday due to the effects of coronavirus, the untaken amount may be carried forward into the following 2 leave years.  In considering whether it is reasonably practicable for an employee to take their leave employers must consider:

• whether the business has faced a significant increase in demand due to coronavirus that would reasonably require the worker to continue to be at work and cannot be met through alternative practical measures
• the extent to which the business’ workforce is disrupted by the coronavirus and the practical options available to the business to provide temporary cover of essential activities
• the health of the worker and how soon they need to take a period of rest and relaxation
• the length of time remaining in the worker’s leave year, to enable the worker to take holiday at a later date within the leave year
• the extent to which the worker taking leave would impact on wider society’s response to, and recovery from, the coronavirus situation
• the ability of the remainder of the available workforce to provide cover for the worker going on leave
  
  

Employers should do everything reasonably practicable to ensure that the worker is able to take as much of their leave as possible in the year to which it relates and where leave is carried forward it is best practice to give workers the opportunity to take holiday at the earliest opportunity.

When employers agree with an employee to carry leave forward due to the coronavirus, they will continue to accrue holiday in the next leave year. As such, they will have 2 entitlements, the carried forward holiday and their entitlement for the new leave year.

When an employee with multiple entitlements takes holiday, it would generally be best practice to allow the employee to take holiday from the entitlement that expires first. In practice, this means they should take the carry forward holiday first as this lasts for 2 years.  When taking carried forward holiday employers must still ensure that the worker receives their full regular entitlement in the leave year to which it relates, in addition to any carried holiday taken.
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Carried forward holiday leave is still subject to the usual rules around payment in lieu.  An employer must facilitate the worker taking their annual leave and not replace it with a financial payment.  The only exception to this is if the employee leaves in which case the unused holiday should be paid at the normal.