If your staff don’t use their holiday, do they lose it?

desk calendar, small wooden clock, drawing pins and coloured labels on a teal background

Now that we are in the last quarter of 2019, you may be starting to look more closely at the holiday entitlement your staff have remaining and wondering if they don’t take all their annual leave before the end of the year, do they lose it?
 

Working Time Directive

Under the European Working Time Directive, all full-time employees have the right to a minimum of 20 days, or four weeks, paid holiday. In the UK, this is implemented into law via the Working Time Regulations.

The Working Time Regulations grant workers an additional 1.6 weeks, which equates to 8 extra days, annual leave. This is often used by companies to cover for bank holidays; however, it doesn’t have to be used this way.

This means if you work full time for 5 or more days a week, you’re entitled to at least 5.6 weeks, 28 days, paid holiday (statutory annual leave) a year.

 

CJEU ruling

The Court of Justice of the European Union (CJEU) has recently ruled on the legality of German laws which say that workers are only entitled to pay in lieu of untaken leave if they have asked to take that leave and been prevented from doing so by their employer. While these two cases related to German law, the findings impact UK employers.

In both cases, the workers had not requested to take their remaining leave entitlement. In one of the cases the employer had written to the worker to highlight the fact that they had leave remaining and asked them to take it.

The CJEU found that a worker who has not taken all of their holiday leave entitlement would only lose it at the end of the year if the employer had ‘diligently’ told them that the leave would be lost. The employer should:

  • inform workers of their entitlement to paid leave
  • give them accurate information about their entitlement including, if that is the case, that they cannot carry untaken holiday forward into the next holiday year
  • do so in good time for them to take the relevant holiday
  • tell them when their entitlement to it expires, and
  • encourage them to take it

The requirement to ‘encourage’ workers to take leave implies that employers must take positive action – merely having a policy setting out workers’ entitlements is unlikely to be enough.

If you do not encourage your staff to take their annual leave, then the employee could be entitled to carry their leave over to the next holiday year. It is important to note that this only relates to the 20 days granted under the European Working Time Directive.

Asking managers or supervisors to proactively discuss with staff why they are not taking their leave may be a way forward, as other contributing factors may be uncovered that you were unaware of. You may like to keep records of these discussions and any action taken as a result.

 

Exceptions

This does not apply where the employee has been unable to take their annual leave due to maternity leave, long term illness and other types of parental leave. Different rules apply in these circumstances.

Employee benefits

Of course, these are only the legal minimum requirements, and as an employer you can offer your staff more leave entitlement and the option to carry a specific number of days over, regardless of the reason, if you so wish. You need to make sure any additional terms are outlined in the contract and that the employees understand how any carryover scheme works and what the requirements are.

 

You can find more information on the regulations regarding leave and time off on the Acas website here.

 

Further information

If you found this information useful, you may also want to check out the following:

 

MRA help individuals, businesses and families achieve the best quality of life they can with the resources they have. MRA specialise in corporate solutions, cash-flow analysis, life centred planning and much more.
Business Consultants based in East Sussex we service clients across the South East, Sussex and Kent, including smaller towns such as Ashford, Battle, Bexhill, Bodiam, Brighton & Hove, Cranbrook, Crowborough, Eastbourne, Hailsham, Hastings, Heathfield, Herstmonceux, Lewes, Mayfield, Newhaven, Rye, Seaford, Sevenoaks, Tenterden, Tonbridge and Tunbridge Wells.

 

Sources:

https://beta.acas.org.uk/leave-and-time-off

https://www.icaew.com/library/subject-gateways/law/legal-alert/2018-12/case-law-employers-must-alert-workers-to-outstanding-holiday-entitlement

https://europa.eu/youreurope/business/human-resources/working-hours-holiday-leave/working-hours/index_en.htm

http://www.hse.gov.uk/contact/faqs/workingtimedirective.htm

http://curia.europa.eu/juris/liste.jsf?num=C-684/16