A question we continually get asked and one that is, can unused statutory annual holiday be carried forward to the next holiday year?
Workers are entitled to 5.6 weeks of statutory holiday each year. This is made up of an entitlement to four weeks under reg.13 of the Working Time Regulations 1998 (SI 1998/1833) and an additional 1.6 weeks under reg.13A.
The four-week holiday entitlement under reg.13 (which derives from EU law) may not be carried forward into the next holiday year. The position with the additional 1.6 weeks’ holiday under reg.13A is different.
Regulation 13A allows for a relevant agreement to provide for any of the additional holiday entitlement to be carried forward into the leave year immediately following the leave year in which it falls due.
However, the Regulations conflict with case law of the European Court of Justice (ECJ), which has held that a worker should be able to take his or her annual leave at another time if it coincides with a period of sickness.
The Court of Appeal in NHS Leeds v Larner  IRLR 825 CA held that the Working Time Regulations 1998 could be interpreted, in accordance with the case law of the ECJ, to allow carry-over of the four weeks’ entitlement under reg.13 if a worker was unable or unwilling to take it because he or she was on sick leave.
In Plumb v Duncan Print Group Ltd EAT/0071/15, the Employment Appeal Tribunal held that, where annual leave is carried over in these circumstances, it must be taken within 18 months of the end of the year in which it accrues.
Many employers also permit any holiday entitlement that has not been taken because of maternity leave to carry over into the following leave year. This solution carries less legal risk than informing an employee that her holiday entitlement has been lost.
Confused! we advise our clients to adequately and carefully manage employees’ holiday entitlement. For example, holiday request records should be kept and a calendar placed within the workplace that everybody can see – or at least is accessible by the management team.
Employers should be continually aware of what holiday is outstanding for each member of the team. They should ensure that their accrued holiday is being taken throughout the year and not left to the last minute, as this can cause extreme operational problems.
Business owners must remember that the accrued holiday should be accounted for. We would suggest that you maintain a separate holiday fund that can be easily accessed when payment is needed.