The Working Time Regulations 1998 (WTR) states all employees have the right to statutory paid annual leave. If an employee works five days a week they are entitled to 5.6 weeks’ annual leave. Annual leave entitlement is then calculated on a pro-rata basis for part-time workers.
Do you have a clear policy stating what happens if the full annual leave entitlement is not taken through personal choice?
Employees sometimes choose not to use all of their statutory annual leave out of personal choice.  What happens to those days and do you have to agree to carry the leave allowance over to the next period?

Case law
This question was addressed in the Employment Appeal Tribunal (EAT) in Shannon v Rampersad & Rampersad T/A Clifton House Residential Home 2015.

In this case, Shannon had two jobs – a day job, and a night job. Between 10 pm to 7 am he was employed in a care home. He was allowed to sleep during those hours but needed to be available should the night care worker need assistance. In return he received free accommodation on-site and was paid the minimum wage should he be called on to help.

During his time in this role, Shannon never took any annual leave through his own personal choice. When he was dismissed he claimed that his statutory leave allowance should have been carried forward and that he was now due payment in lieu. This claim totalled £15,000.

The tribunal decided that as Shannon could have requested annual leave but chose not to, he was not entitled to have his leave allowance carried forward or therefore any pay in lieu.

The tribunal stated that Shannon was neither “unable nor unwilling to take annual leave due to reasons beyond his control”.
This makes the rule very simple – if the Annual Leave is not used out of personal choice, it is lost.
The Working Time Regulations do not allow carry-over of the first four weeks of statutory annual leave, but the remaining 1.6 weeks can be carried over.

If as an organisation you decide to allow entitlement to be carried forward to the next holiday year, the entitlement should be subject to agreement and detailed in the employees’ contracts and organisational policies. Having it clearly stated will avoid any issues of debate. If you need assistance with how to manage Annual Leave we have an Employers Guide in our Online HR Toolkit.

If you would like to review your annual leave policies and approach or would like to understand more about the legal requirements we would be happy to discuss your options. We provide HR expert advice and support whether on an ad-hoc basis or as an outsourced part of your team.  We look forward to hearing from you on 01473 360160.