Why don’t employees use all their annual leave?​ Can you carry it over if not taken?

As I sit here tapping away on the decking, anticipating my next holiday, I began pondering, why on earth don’t all employees take their full annual leave allowance? Depending on which survey you read, between half to two thirds of all UK employees fail to take their full annual leave allowance. On top of this, nearly half of all employees work whilst they are on holiday. So why does this happen and what could be done about it?

Why do people not take all their annual leave?

The main reason employees don’t use all of their holidays is that they fear falling behind. Workplaces have typically become so lean that there aren’t enough people around to cover them when they are absent from the office.

Other common reasons are:

• Wanting to be noticed and get a pay rise
• Feeling that no one else can do the work
• Inability to disconnect
• (Perceived) pressure from management

So fear in its many guises is the main reason why annual leave goes unused.

Why is this a problem and what can be done about it?

The legal position on annual leave:

The Working Time Regulations stipulate that all employees should receive a minimum of 5.6 weeks annual leave. This figure is inclusive of public holidays and is, of course, pro-rated for part time employees. So the legal starting point is that employees should take their annual leave. Employers can’t pay the statutory portion out. 

Problems problems….

Not taking annual leave can impact productivity levels and staff morale. It also has an impact on a company’s financial liability. By taking annual leave, Expedia’s 2016 study revealed that a staggering 90% of employees felt less stressed and more relaxed. 89% felt happier and better rested, whilst 83% felt that they were more focused at work when they returned. So not encouraging staff to take their annual leave is a false economy, their health and wellbeing suffers as does the organisations bottom line.

What can employers do about annual leave predicaments?

Potential solutions

Some solutions are pretty obvious but others may require a change in organisational culture and may therefore take longer to embed. However difficult that journey may seem, it is well worth starting.

1. Lead by example. If you want your employees to take a break, then you need to show them that its possible. If you are tempted to contact your team members to ask them a question whilst they are on leave, ask yourself, can it not wait a couple of weeks? By switching your phones off when you are away, your employees are more likely to do the same.
2. Encourage employees to book annual leave ahead of time. Often employees don’t take holidays due to poor planning. Time simply runs away from them and before they know it, there’s no time left to book the leave. Reminding employees to book their leave will encourage them to plan ahead.
3. Ensure there is a back up plan. A single point of failure caused by there being only one expert in the organisation isn’t always the best way to plan. Can someone else be trained to keep the essentials running whilst the expert is away?
4. Give employees the space to get back into the swing of things when they get back. It takes time to clear the email backlog, so help your team by creating space for them to feel like they can do that without having to dive straight in.

Can you carry unused annual leave over?

A question that is often asked around annual leave is can I carry over my annual leave from one year to the next. The answer to this lies both in legislation and in the contract of employment. So what is the position about carrying annual leave over?

Statutory Annual Leave

The starting point when asking this question is what is the minimum amount of annual leave you should receive? The Working Time Directive 1998 sets out the minimum everyone should receive. In the UK this was a staged increase and has been at 5.6 weeks (28 days) for over a decade now. This figure includes bank holidays and is the minimum contractual entitlement. The amount is split into 20 core days and 8 bank holidays. The 20 days must be taken each year (apart from where statutory leave prevents it). The 8 days can be carried over. 

Use it or lose it?

The question to ask here is: what is the minimum amount of annual leave you should receive? The Working Time Directive 1998 sets out the minimum everyone should receive. In the UK this was a staged increase and has been at 5.6 weeks (28 days) for over a decade now. This figure includes bank holidays and is the minimum contractual entitlement. 

The amount is split into 20 core days and 8 bank holidays. The 20 days must be taken each year (apart from where statutory leave prevents it). The 8 days can be carried over. 

Statutory Leave

The main exceptions to the general rule of forfeiting holidays is where an employee is on statutory leave such as Maternity or Sickness. Here the employee continues to accrue holidays whilst they are off and can carry any unused annual leave over to the next year. This includes bank holiday entitlement. So employees could end up with a minimum of 56 days unused annual leave days to use in the following leave year. In this case you should have a conversation with your employee to get a plan in place of how they will take their unused annual leave.

Enhanced Company Annual Leave

Where a Company decides to enhance the annual leave entitlement above the statutory minimum, then the decision rests with the Company as to what you can do with unused annual leave above the 20 days. So for instance, if a Company gives 25 days + 8 bank holidays to their staff, they can choose whether to allow employees to carry over 5 days to the next year. It’s therefore an operational decision. If the employee couldn’t take the unused annual leave for work reasons, then you may accept the request. If it is just down to them not booking it in time, you may be less charitable.