Losing Holiday Entitlements


Our company wants to bring in a  policy of allowing to carry over a maximum 5 days holidays, this is to encourage people to use up their entitlements instead of letting them build up. However, the policy will state that only 5 days can be carried over and if the employee has more days left at the end of the year they will lose them. 

Would anyone know if there are any legal ramifications behind this policy?

Thanks in advance

  • Hi Olivia

    My understanding is:

    Statutory holiday cannot be carried over (employees must take their legal minimum leave requirement each year) unless long term absence has prevented the taking of holiday (maternity / long term sick etc) In these cases the employer should agree with the employee the date by which they must take their carried over leave.

    If you offer more holidays that the statutory minimum, you can set your own rules around 'use, lose or carry over' of leave.


  • Hi Olivia

    Agree with Jo, and having taken legal advice on this exact question, our definition of "statutory" relates to the EU minimum of 20 days, not the higher UK minimum of 28.
  • Hi Olivia, just adding to the comments already provided - this is a situation I faced as an HR Assistant some years ago and the way this was handled was by sending out regular reminders via email and/or line manager about any holiday which appeared to be building up. A multi-pronged approach is advisable since rules alone are unlikely to solve the problem.
  • Hi All,

    Thank you for advice.

    Can we insist on people taking holidays as to avoid a carryover situation?

    Thanks in advance.
  • In reply to Olivia:

    A policy of use it or lose it is perfectly legal and legitimate. Carry over may be a contractual right however or it just maybe a policy

    Under the WTR you can also stipulate when staff must take holiday so you could in theory schedule in any unbooked holiday after giving staff the opportunity to book.
  • Hi Olivia, your query is dealt with in an FAQ on the Ibec website:

    The bit that relates to you is as follows:

    Where statutory annual leave is not taken in the leave year it is accrued, an employee cannot ‘lose’ statutory leave if it is not taken. Where the employee has been encouraged to take his or her statutory annual leave within the leave year but has failed to do so, an employer may require the employee to take annual leave with one month’s notice. Employers who provide additional company leave days in addition to statutory leave may employ a ‘use it or lose it’ policy with respect to these days, as they are viewed as a company benefit and are not governed by the Organisation of Working Time Act 1997.