The end of the year is supposed to be a happy time, full of cosiness, warmth and relaxation after a hard year's work. At least it would be if everyone could book the days off they wanted, and there was no fighting over who's allowed to take leave.

But that doesn’t always happen.

Many companies get to December and find out they’ve got loads of staff with unused annual leave. This can lead to a festive free-for-all, where the office becomes unnaturally empty (and productivity takes a nose-dive) in the winter months.

Could annual leave carry-over be a good remedy for this problem? And can you use it to keep workers happy without sacrificing the business? The answer is yes - here are some possible solutions.

What is holiday carry over?

It’s a policy that lets workers carry part of their holiday entitlement over into the next leave year. It’s typically used when they haven’t had the chance to take all their statutory holiday entitlement during the year (or they just forgot to book time off).

Can you carry over holidays to the next year?

Yes you can, if your company allows it.

They’re legally allowed to permit carried-over leave, which we think is the sensible thing to do. But they don’t have a legal responsibility to do this.

Employees are entitled to 28 days of statutory annual leave per year (5.6 weeks). 4 weeks of this must be taken within the year it was earned.

The remaining 1.6 weeks, plus any extra your company gives, may be carried over to the next year.

However - this is at the company’s discretion. They’re allowed to implement a ‘use it or lose it’ policy, but this must be documented and fairly communicated in good time before the end of the year. They can also limit the number of days of carryover to less than 8.

So, for someone who works 5 days a week and is granted those 28 days, that means they’d be allowed to carry 8 of those untaken leave days over to the following year, unless their company denies it as part of their standard policy.

(During the pandemic, the UK government allowed more leave than usual to be carried over for everyone - up to 2 weeks. In April 2024, these rules were reverted as the coronavirus situation has reduced in impact).

Reasons someone might want to carry forward annual leave

If you’re a business owner or manager, why would you need to allow carrying over of annual leave entitlement? Well, there are a couple of scenarios where it makes sense.

1) Making up for sickness

If someone’s off sick, they might want to carry over the annual leave they missed to the next holiday year. According to the working time regulations 1998, workers should legally be entitled to take their annual leave at another time if it coincides with a period of sickness.

However, in UK employment law, there is no requirement for any more than four weeks’ annual leave to be carried over in cases of long-term sick leave.

2) Maternity, paternity or parental leave

It’s a legal requirement that parents must be able to carry over any annual leave that they accrue whilst being on maternity leave or paternity leave.

3) Intentionally carrying it over

If your annual leave carry over policy allows it, you might have some team members looking to carry over leave intentionally. This might be so they can take extra long holidays or deal with commitments like weddings and honeymoons, without having to take unpaid leave.

What are the advantages of allowing holiday carry over?

In general, letting employees carry over one or two weeks of annual leave can be a positive thing. Even just a few days can be beneficial for everyone involved.

  • It can prevent overbooking at the end of the leave year. When everyone’s trying to use up leave allowance, at the same time letting some of it be carried over to the new year can lower the demand that causes festive staff shortages.
  • It brings more flexibility to your company culture, which we’re generally big fans of. Allowing staff to plan further ahead than December will be appreciated, especially if they want to purposefully save up extra leave days for a big trip the following year. Great for retention and attracting staff who appreciate flexibility.
  • It doesn’t really cost anything to manage. If you’ve got a really good HR software for managing holiday days (like Timetastic!) it’s simple to manage.

And in many cases, January and February are pretty quiet times for holidays, so it shouldn’t cause major problems with staffing if people carry over additional leave for those times. It lets bargain hunters snap up cheaper deals for flights and hotels in the off-season begin.

What happens if you don't allow annual leave carry over?

If you get to the end of the year and staff aren't aware they can't carry leave over, it’s going to lead to difficult decisions and conversations that could have been prevented.

Especially if you’ve got no documented absence policy and you’ve made promises without noting them down.

Imagine denying someone a December holiday, and they respond with this:

“You said I could have all of Christmas off, remember? My parents have booked flights to come over and see us. We can’t cancel now!”

If you're already at a low headcount over Christmas, the only way to solve this would be to ask another colleague to cancel their leave to cover, and carry over that leave to next year.

If you go back on your word and just say no, you'll probably find unplanned absences start to increase around that time anyway.

So this sort of no-carryover policy needs robust forward planning to avoid these conflicts.

The first thing you should do is decide your carry-over policies in advance, note them down in a simple document, and communicate them through the company, throughout the year. We’ve made some simple templates you can use which should make it an easy process - head here to download them.

How to avoid excessive holiday carryover

There is a chance that too many people save up their leave through the year, putting undue pressure on your headcount the following year.

The simplest solution to this is to encourage staff to use their leave throughout the year!

This works out better both for your company and your workers. You get to plan your resourcing much better, without major fluctuations in headcount. And the worker gets to make use of their allowance (a benefit not everyone gets to enjoy) and reap the benefits of much-needed downtime.

This is important, because some people are prone to overworking themselves to a state of burnout without realising it. Others think they should only use annual leave for big trips abroad - which isn’t right, as we all benefit from just staying home and doing nothing every now and then.

If you balance a sensible policy of allowing some carry-over alongside a culture of encouraging staff to take time off, you should end up with a happy workforce and a stable headcount.

How to easily manage holiday leave carry over

The best way to manage everyone’s carried-over allowance is by using a staff leave planner like Timetastic.

Whatever your carry-over policy is – restrictive, a flexible accrual system, or somewhere between the two, Timetastic will change the way you manage your worker’s leave. They might be full time, part time, or on irregular hours – it’s all catered for.

We even added an expiring carry forward option, so you can make sure any carried-over leave has to be used within a certain amount of days – great for making sure things don’t get out of control.