Paid annual leave

The right to paid annual leave

Under the Annual Leave Regulations 2007 (“the Regulations”) all workers over compulsory school age, including agency workers and trainees, are entitled to:

• 4 weeks' paid leave each year ('statutory leave'); and
• payment, when their employment terminates, for any leave to which they are entitled but which they have not taken.

There is no qualifying period for these rights. But in the first year of a worker's employment, his or her entitlement accrues at the rate of one twelfth per month.

A week's leave should allow a worker to be away from work for a week. It should be the same amount of time as the working week: if a person works a 5 day week, he or she is entitled to 20 days' leave in a leave year; if he or she works 3 hours a week, the entitlement is 12 hours' leave.

Employers may count any paid bank holidays taken by workers towards their entitlement.

Interaction with family leave

Entitlement to statutory annual leave is not affected by any period of ordinary or additional maternity leave, ordinary or additional adoption leave, parental leave or paternity leave. Further, an employer may not require a worker to take annual leave on any day when the worker is taking such leave.

Interaction with sick leave

Entitlement to statutory annual leave is not affected by sick leave which does not exceed 26 weeks in a complete leave year. Where the amount of sick leave is greater than 26 weeks in a complete leave year (or a proportionate period in a part year), the entitlement to annual leave is reduced proportionately and totally extinguished in the case where the worker has been sick for the whole of a leave year (or part-leave year).

Carrying over leave and payment in lieu

Except in the circumstance set out in the following section there is no right to carry over statutory leave from one leave year to the next. So if a worker's holiday rights are confined to those which he or she is granted by the Regulations and he or she does not exercise the right to take annual leave within a leave year, then the statutory entitlement to paid holiday will be lost.

Nor do the Regulations make any provision for unused leave to be replaced with a payment in lieu, except where employment is terminated.

Carrying forward unused leave which has not been taken as a result of Coronavirus

There is an exception to the restriction on carrying forward annual leave where it has not been reasonably practicable for a worker to have taken all of the statutory leave to which he or she was entitled in a leave year as a result of the effects of Coronavirus (whether on the worker, the employer, the wider economy or society or otherwise).

• Such unused leave may be carried forward but must be taken in the two leave years immediately following the leave year in respect of which it arose.
• Where employment terminates and the worker still has unused leave the employer must make a payment in lieu of such leave.

Notice of intention to take leave

Workers are required to give notice to their employers if they wish to take a holiday. The notice must be twice as long as the period of leave requested (e.g. a worker wanting one week's holiday must give 2 weeks' notice). The employer can refuse permission by giving notice at least as long as the leave requested.

Requirement to take leave at specific time

An employer may require a worker to take all or any of his or her annual leave at specific times, provided that the worker is given prior notice of at least twice the period of leave to be taken.

Contractual rights

A worker's contract may confer rights to paid holiday more advantageous than the statutory rights. In that case the worker may exercise whichever right is more favourable.

'Relevant agreements'

Certain aspects of the statutory regime (such as the leave year commencement date and notice requirements) may be varied to a certain extent by a 'relevant agreement', i.e. a collective agreement with a trade union, or any other agreement in writing which is legally enforceable between the worker and the employer. In the case of employees, inclusion of the relevant matter in the written particulars will usually be sufficient for this purpose.

“Rolled up” holiday pay

A worker's holiday pay is normally paid when annual leave is taken. But in some cases it can be paid in instalments, on an accruing pro-rata basis, as an addition to the worker's ordinary wages. This is known as 'rolled-up' holiday pay. The Regulations allow rolled-up holiday pay to be paid in respect of annual leave, subject to certain conditions:

• a 'relevant agreement' must specify the amount or proportion of the gross pay which is in respect of a period of annual leave;
• the amount or proportion must be a genuine addition to the regular remuneration (i.e. the pay net of holiday pay); and
• a pay statement must specify the amount of remuneration in respect of the period of annual leave (even if the worker would not normally be entitled to receive a pay statement because he or she is not an employee).

Detriment

A worker has the right not to suffer detriment for asserting the right to annual leave. Dismissal of an employee for asserting the right to annual leave is automatically unfair.

Enforcement

The right to annual leave may be enforced, in case of the employer's failure to allow the worker to take annual leave or to make a payment due, by complaint to the Employment and Equality Tribunal within 3 months of the action in question (or the last of a series of actions), but the Tribunal can allow a complaint out of time if there was a good reason for the delay.  Where the complaint relates to the employer's failure to pay 2 or more amounts of holiday pay, the 3-month limit applies to the last of those amounts, but the Tribunal cannot consider a complaint relating to a payment which was due more than 12 months before the complaint was made.  Where the claim is successful the Tribunal makes a declaration, and may award compensation of an amount which it considers just and equitable, having regard to the employer's infringement and the worker's loss.

Further information 

Further information on the right to paid annual leave can be found in the Guide Holidays and Holiday Pay.