Whether you're a business owner or an employee, you might have heard about carrying over annual leave. If you are wondering how this works or don't know what I'm talking about? Carry-over annual leave is the practice of annual holiday entitlement being carried forward to the next 12 months, instead of having it expire at the end of the current year.
Statutory holiday entitlement
The right to be paid for holidays is a statutory entitlement. By law, all workers are entitled to 5.6 weeks of paid holiday each year, this equates to 28 days. A year is specified in the employment contract, the contract will outline the beginning and the end of the period you can take your holiday.
4 weeks of our annual leave, often referred to as basic leave, is derived from the EU Working Time Directive. 1.6 weeks is referred to as additional leave and is derived from the Working Time Regulations 1998.
An employer can decide whether or not bank holidays are included or excluded from the annual leave entitlement. This means the minimum requirement for employers to offer someone in full-time employment, would be 20 annual leave days plus 8 bank holidays. To remain competitive most employers offer around 25 days plus the 8 public holiday days, equating to 33 days of paid annual leave.
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How to work out pro-rata annual leave?
Part-time workers are also entitled to 5.6 weeks of paid holiday per year, this is calculated on a pro-rata basis. If a part-time worker works 3 days per week, they are entitled to 16.8 paid annual leave days.
3 days x 5.6 weeks = 16.8 days of paid annual leave
The same goes for workers beginning or ending their employment part way through the year. Their holiday entitlement will be calculated on a pro-rata basis. To do this you can use a simple formula of dividing the number of days the employee has been employed during the current year by 365 and then multiplying by 5.6 weeks of holiday (or 28 days).
For casual workers or hourly workers, a percentage of 12.07% is accrued for every hour worked. This is calculated by:
5.6 weeks / 46.4 weeks ( 52 weeks - 5.6 weeks) x 100 = 12.07%
Government guidance on carrying over annual leave
Employers are obliged to ensure that staff take their statutory annual leave entitlement during the year and failure to do so could result in a fine.
Under the EU law, workers can carry forward up to 4 weeks of annual leave if they were prevented from taking this due to sickness or maternity leave.
Some employers will allow their staff to carry forward unused annual leave into the subsequent year however carrying over holidays is considered a benefit and purely depends on the employer's discretion.
What's the new guidance on carrying holidays over since COVID-19
During the COVID-19 pandemic, the government relaxed its guidance around carrying over annual leave entitlement. Workers who were not able to take their annual leave due to COVID-19 can carry up to 4 weeks into the next 2 years. This ruling came to remove the burden from the business of ensuring leave is taken in one year.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.