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 staff were able to book the right days off, and there was no fighting over who's allowed to take leave.

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.

Is annual leave carry-over 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.

Yes it is!

Employees are entitled to 28 days statutory annual leave per year (5.6 weeks). 4 weeks of this must be taken within the year it was earned (the EU minimum, which might change as the UK’s relationship with Europe changes).

The remaining 1.6 weeks, plus any extra your company gives, are UK statutory leave, and may be carried over to the next year. However - this is at your discretion. You'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. You can also limit the number of days of carryover to less than 8, if you like.

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 days over to the following year, unless their company denies it as part of their standard policy.

Reasons to carry forward annual leave

Why would anyone want to carry forward part of their annual leave entitlement? Well, there are a couple of reasons.

Carryover of annual leave due to sickness

It may be possible that due to long term sickness, a member of the team should need to carry over annual leave to next year. The European Court of Justice agreed that workers should legally be entitled to take their annual leave at another time if it coincides with a period of sickness. However, for UK employers, there is no requirement for any more than four weeks’ annual leave to be carried over in cases of long-term sickness absence.

Carryover of annual leave due to parental leave

It is a legal requirement that women must be able to carry over any annual leave and bank holidays that they accrue whilst being on maternity leave.

Intentional carry over of annual leave

If your annual leave carry over policy is well publicised, you may have some team members looking to carry over leave so that they can plan for extra long holidays or events like weddings and honeymoons, without having to take unpaid leave.

What are the advantages of allowing holiday carry over?

It can be a fix for the familiar problem of overbooking at the end of the year.

When everyone’s trying to use up a backlog of annual leave, letting some of it be carried over to the new year can lower the demand that causes festive staff shortages.

It also gives a bit of flexibility to your company culture, which we’re generally big fans of. Allowing staff to plan further ahead than December will be appreciated by them, especially if they want to purposefully save up extra leave days for a big trip the following year.

And in general, January and February are pretty quiet times for holidays, so it shouldn’t cause major problems with staffing if people carry over 'til then. It also allows bargain hunters to snap up cheaper deals for flights and hotels as the off-season begins.

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.