It seems a bit crazy to think that some people don't take all their annual leave each year. We can all think of times we’d kill for an extra day off even though our allowance is spent.

You might be surprised to hear that not everyone uses their whole allowance. In fact, on average we only take 77% of our annual entitlement each year. Even when we're away on holiday, almost half of us say they've done some work or been in contact with colleagues. Shocking!

Unused holiday does complicate matters, especially when a new year comes around and we need to work out what to do with your balance remaining.

Should you allow annual leave to carry over into a new year?

In the UK, employers have no obligation to carry over holiday allowances into a new year.

Editors note: because of COVID the government has updated regulations to allow annual leave to be carried over into the next 2 years.

Normally it’s up to the company to decide, and you'll find 5 days is a typical amount you'll be allowed to carry into the next year.

At first glance it looks sensible, but it's got downsides. It sends a message, "don't worry about taking your holidays, you can do that next year". When the reverse is true, you want people to take their annual allowance in the year it's earned.

A sensible approach would be to consider why people aren't taking their annual leave, and address those underlying issues.

Why don’t people take all their annual leave?

There’s a few reasons why the annual leave counter doesn’t reach zero by December 31st.

The most common one is that staff are afraid of work piling up, causing them to fall behind. It's understandable but it’s not a healthy work-life balance for most people.

Others claim they do it to impress their bosses in hope of a pay rise, and some reckon nobody else is able to do their job while they’re away. Schedule clashes can also contribute, when multiple people want the same day off.

Unspent allowances are especially common in companies with unlimited leave policies. While it seems like a fantastic benefit if you’ve not had it before, unfortunately, company culture tends to subtly discourage the use of it. And if there’s no allowance at the end of the year, there’s no incentive for bosses to insist on employee holidays. However, a workforce that never goes on leave is more likely to get stressed, burnt out and ill, so taking time off is worth promoting.

What to do if employees don’t take annual leave

If unused annual leave is a problem, and staff are stacking up their allowance 'til the last part of the year, you’ll want to intervene. Here are a few tactics that might help.

  • Hire people - easier said than done. But of workloads are too much then addressing staff shortages will take the pressure off everyone in the long-term.
  • Manage projects better - hire a dedicated project manager, get some decent project management software, or improve the current system. You're looking for efficiencies and a better way of working.
  • Slow it down - dare I say it? You could ease up a little, tone down your sales and marketing for a while to give everyone some breathing space.
  • Avoid clashes - not easy when two people want the same day off. But it can be mitigated and managed with more flexible working times and a good staff leave planner.
  • Encourage people to take leave - try to develop a culture that values rest just as much as the grind.