Many employers still use the concept of “use it or lose it”, if holiday entitlement is not taken within the particular holiday leave year then this is lost. However, this is a fast developing area of law which can catch employers out and will depend on each individual’s facts and circumstances.
The minimum annual leave entitlement for a leave year is 5.6 weeks. Generally, an employee does not have the right to carry over leave from one holiday year to the next if their contract does not allow this. If your contracts of employment state any practices in relation to rolling over holiday, then you should follow this as not doing so could lead to a claim of breach of the employment contract. It is only permissible to allow carry over of a maximum 1.6 weeks of leave (which works out as 8 days for a 5 day a week worker). 4 weeks of leave must be taken in the leave year to which it relates.
If your policies or procedures are silent on this issue then you can allow carry over by giving permission to do so. You should be aware of agreeing to this outside of a contract, or any previous occasions where you have allowed this, as you could be creating an implied term in to your contracts of employment which has the potential to allow future employees to roll over their holiday.
This area becomes more complicated when the employee in question cannot take their holiday leave entitlement because they are already on a type of leave, for example, sickness absence or maternity leave.
During sickness absence employees continue to accrue holiday at their normal contractual rate and, if they cannot take this all during the normal leave year due to sickness, then the most recent case law indicates that employees are allowed to carry over 4 weeks holiday into the next leave year. In this situation, you do not have to permit them to carry over the remaining 1.6 weeks.
If the employee is on maternity leave they, again, continue to accrue their holiday entitlement. Women cannot take holiday during maternity leave and it may be potentially seen as discriminatory if your employees lose their holiday allowance because they are on maternity leave. Therefore, you should allow employees to either take all their holiday before maternity leave, add it on to the end of their maternity leave period or allow them to carry it over in to the next leave year.
If you need any clarification on this issue then contact the Peninsula Advice Service on 0844 892 2772.