11 December 2024

The advisory team has received an increased number of queries in relation to processing unused annual leave at the end of the leave year.

What you can do about unused leave

First things first, employees line managers should ensure that annual leave is used throughout the year, in line with The Working Time Regulations 1998, ensuring they have sufficient time away from work.

The minimum amount of annual leave an employee should receive in the leave year is 5.6 weeks. This is made up of four weeks, plus 1.6 weeks of additional annual leave.

If an employee has not been able to take annual leave due to absence or statutory leave, i.e., maternity leave, they will be able to carry over their unused entitlement into the following holiday year.

What you can’t do in relation to unused annual leave

The one thing an employer can’t do, is pay any unused annual leave entitlement to an employee at the end of the holiday year, because they haven’t used their leave, in the form of a ‘bonus’.

For example, in December when the holiday year ends, an employee has five days of annual leave entitlement remaining. The employee doesn’t want to take the holiday leave, so they employer agrees to pay them the five days annual leave entitlement on top of their normal monthly renumeration.

This is stated in The Working Time Regulations 1998, regulation 14(1):

“14.—(1)  Paragraphs (1) to (4) of this regulation apply where—

(a) a worker’s employment is terminated during the course of his leave year, and

(b) on the date on which the termination takes effect (“the termination date"), the proportion he has taken of the leave to which he is entitled in the leave year under regulations 13(1) and 13A(1) differs from the proportion of the leave year which has expired.”

Please see the below guidance pages for further information:


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