How to deal with unused annual leave

Kevin Bennett

December 13 2019

2019 is coming to an end. With 2020 around the corner, businesses are handling the last of their employees’ annual leave requests.

To guarantee you’re prepared, let’s look at how to handle end-of-year annual leave requests.

Can I make an employee use their untaken annual leave?  

Employees are not entitled to take their annual leave whenever they like. As the employer, you’re entitled to approve the request depending on your business needs. To handle annual leave correctly, put effective policies and procedures in place.  

First, set out clear and consistent policies

Your annual leave policy should be as clear and easy to understand as possible. What employees need to do to make a valid request for annual leave should be communicated in the policy.

Consistency is key when approving employee requests. Accepting one request and turning down another similar one could lead to internal conflict. That said, the time may come when you need to refuse a request for annual leave. If so, you need to show that there was a legitimate business reason for the refusal of the request. A first come, first served policy is often practiced by employers in this situation.  

Obliging employees to take annual leave  

From time to time, employees will have leftover annual leave entitlements. If your employees have annual leave to use, allow them time to take it. Cases of leftover annual leave entitlements often occur when an employee leaves your business.

Employees leaving your business  

Departing employees are entitled to payment for their unused statutory annual leave entitlements. This applies regardless of the reason for the employment ending. Unused annual leave above the statutory minimum can also be withdrawn by the employer. However, this must be stated in your company policies and the contract of employment.

Limiting payments in lieu of annual leave to the statutory minimum only is better financially. You should also exclude contractual annual leave from payments in lieu.  

Carryover policy  

Employers have no statutory obligation to allow the carrying over of unused leave.

Specific provisions apply to employees who are on long-term sick leave or maternity leave. Annual leave may only be carried over if the employer authorises it, or if it’s stated in the employment contract and/or staff handbook.  

Need our help?

If you would like further complimentary advice on annual leave from an expert, our advisors are ready to take your call any time day or night. Call us on 0800 917 0771 or request a callback here.

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