Holidays & Annual Leave | Frequently Asked Questions

1. Can annual leave be cancelled?

There may be situations where you need to cancel an employee’s annual leave that has already been approved, such as a deadline being brought forward or an important meeting being scheduled during the time off. In these situations, you must give the employee the same length of notice as the period of leave that they planned to take. 

For example, if an employee was due to take a week’s holiday and you wish to cancel it, you must give them a minimum of a week’s notice.

In usual circumstances, employers must not cancel annual leave if it means the employee cannot take their full statutory annual leave entitlement for that year. However, during COVID-19, it may be possible to do so as the Working Time Regulations have been amended to allow unused annual leave to be carried over into the next leave year so that businesses aren’t left short-staffed and employees don’t lose out.

2.Can employers force employees to take annual leave?

In the absence of any contractual clause or relevant agreement, regulation 15(5) of the Working Time Regulations 1998 states that an employer can require an employee to take annual leave provided they give them sufficient notice (double the amount of days they require the employee to take). For example, if you need an employee to take three days’ annual leave, you must give them six days’ notice. It is quite common for employers to require staff to take leave at certain times, such as during the business’ off-season or if the business shuts down over Christmas.

Get employers annual leave advice from an employment law specialist.

3. When can a new employee take annual leave?

Annual leave begins accruing as soon as the worker starts work with you. This means that the right to annual leave is not dependent on the completion of a probationary period. During the first year of employment, employers may decide to use an accrual system to calculate the worker’s holiday entitlement. In each month, the worker will have the right to one twelfth of their leave. Therefore, if the worker wants to take leave within the first few weeks, they may need to wait a bit before they have accrued enough days.

Alternatively, you may choose to give new workers all their statutory annual leave entitlement upfront from day one. Whichever approach you take should be clearly outlined in your annual leave policy.

4. What is holiday pay on termination of employment?

At the end of the employment relationship, any accrued but untaken leave must be paid. (Note, however, that you cannot choose to pay an employee in lieu of annual leave while they are employed by you.) Conversely, if the employee has taken more days’ holiday than they have accrued by the time they leave, the employer can deduct money from their final pay if this is provided for in their Contract of Employment or other written agreement.

5. Do all employers have to pay holiday pay?

Yes. Under UK employment law, full-time employees have the right to 5.6 weeks (28 days) of paid annual leave per year. This is pro-rated for those working part-time; for example, if an employee works three days per week, they will be entitled to 16.8 days’ paid annual leave (5.6 x 3).

For workers with fixed working hours, holiday pay amounts to their weekly normal remuneration. If an employee’s hours vary from week to week, holiday pay will be calculated on the average pay the employee earned in the past 12 weeks. Any guaranteed overtime – or any voluntary overtime that is sufficiently regular enough to amount to normal remuneration – must be included within your holiday pay calculations.

6. Do employees accrue annual leave during notice period?

Yes. Employees will continue to accrue statutory annual leave while working their notice period; however, they may not accrue any additional leave that your company offers beyond the statutory minimum. Check the terms of their Contract of Employment.

7. Do employees accrue annual leave during maternity leave?

Yes. Employees continue to build up their annual leave entitlement while on maternity leave, just as they would if they were at work. However, they cannot take annual leave while on maternity leave and the law does not allow employees to carry leave from one year into the next. As such, pregnant employees must be allowed to take statutory annual leave either before they go on maternity leave or when they return. If this is not possible, then the employee should be allowed to carry over any unused annual leave into the next leave year.