Should You Let Employees Carry Over Left Over Annual Leave?

Sep 08, 2020 · 9 mins read ·

Employee Wellbeing, Policies & Benefits
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It’s September already and although we hate to jump the gun, it’s worth pointing out that now we’re into the fourth quarter of the year, Christmas will be creeping up on us before we know it.

We know, we know - it seems to get earlier every year, with decorations and selection boxes appearing on supermarket shelves as soon as the school summer vacation is officially over.

And while we’re not rushing out to buy a Christmas pudding just yet, for anyone working in HR, there’s no better time to start thinking about how to handle your company’s annual leave allocation over the festive period.

In many organizations, the vast majority of employees all want time off over Christmas and New Year. It makes sense, yet what happens when December rolls around and you find you have lots of people who’ve barely used any of their annual leave and want to take it all off at the end of the year?

If you don’t have a policy in place you could well find yourself with an empty office and practically no work being done.

So how do you tackle the issue? How do you stop, what can feel like, virtually all your staff accumulating vacation and then wanting to take it all off as the year draws to a close? This is where allowing employees to carry over (some of) their days comes in.

Should you let employees carry over their left over annual leave?

Allowing employees to carry over their left over annual leave is one way of getting around the thorny issue of who can take time off over Christmas - particularly when a large percentage of your workforce still have lots of vacation days to take.

Read more: Why You Need to Encourage Employees to Use Their Annual Leave

As an employer it is likely that your company gives your employees the UK’s statutory 28 days of leave per annum. This works out at 5.6 weeks per person, per year.

The EU stipulates that four of these 5.6 weeks must be taken within the year that they were accrued. (As of the time of writing - this might change given Brexit etc.)

That leaves a total of 1.6 weeks as well as any other days your organization gives employees on top of that. Legally, these days can be carried over into the following year.

But - and here’s the but - this is at your company’s discretion. That means you’re well within your rights to either allow people to save some of their days and add them on to their next year's allowance - or tell them it’s a ‘use it or lose it’ type scenario!

What should your annual leave policy cover?

The crucial thing to remember is, that when you’re implementing your annual leave policy, you must ensure that all employees know what it entails.

Not only should this information be included in your welcome pack and on your new hire or first day checklist but it would be fair and decent to also send around a reminder at a timely point in the year, especially if you are taking the 'use it or lose it' route.

Read more: How Does Your Annual Leave Allowance Stack Up?

And if you are allowing employees to carry over days, it is advisable to set a limit on the number of days people are allowed to keep so that no one is amassing unwieldy amounts of vacation! You may also want to set a deadline by which carry over days must be used by.

This has the advantage of getting people to take vacation during January and February, which are, generally speaking, quieter times of the year for many businesses.

The pros of allowing staff to carry over their vacation

There are a number of plusses when it comes to letting employees carry over their annual leave into the next year - for both you as an employer and for them as a member of staff.

As we’ve covered, it will help prevent the end of year surge to book remaining leave off, thereby leaving you with enough cover to stop workflows grinding to a halt and helping to maintain a positive and productive atmosphere in the office - even if the festivities are just around the corner.

Read more: Does Your Company Need a Lateness Policy?

A carry over policy also looks good on paper and will be appreciated by your employees.

As we’ve covered before in the Hezum blog, creating a great company culture is about showing your employees recognition, implementing generous but fair policies such as paternity leave, and throwing in perks such as duvet days.

It won’t hurt either when you’re trying to attract new quality candidates to your vacancies.

The cons of NOT allowing staff to carry over their vacation

So what does a typical scenario look like if you don’t offer a carry over policy? If this is your current position on the issue, you might have found that come December you have some pretty tricky conversations with some of your employees - especially if your policy has not been properly communicated.

It’s back to that old new starter and first day checklist again and your friendly HR department’s periodic reminders!

Read more: Your Onboarding New Hire First Day Checklist for Interns

When hoards of employees all try to book days off at the same time, your various teams or departments are going to be left short staffed. And while Christmas and New Year are often slower (depending, of course, on your industry) you could still be left short of crucial manpower.

And if Christmas is a busy period for your business this really is the last thing you want!

There’s also disgruntled employees to factor in: Even if you have made your ‘use it or lose it’ stance clear, feeling like they’ve lost vacation days will leave a lot of staff feeling cheated. Which in turn doesn’t lead to good employer-employee relations and could even have an effect on your employee retention rates.

Why you need a documented annual leave policy

If you don’t have a formal annual leave policy you could be creating an absolute headache for yourself, the rest of your Human Resources team, your managers, and even your employees.

Let’s say back in August you promised Mike on the sales team he could take two weeks off over Christmas and New Year. However, his teammate Lisa also wants the same period off. And Lisa’s booked flights to Mexico to spend Christmas somewhere a little warmer.

You need at least one of them in the office so do you go back on your promise to Mike and ask him to cancel his stay-at-home plans and provide cover in the office instead?

It’s highly unlikely that the conversation is going to be a fun one - and someone is going to wind up upset, resentful and feeling like their coworker has been given preferential treatment.

And if you’re not allowing employees to carry over their annual leave, this is going to make matters ten times worse as either Mike or Lisa not only has to forgo their plans, but they’ll also lose some of their vacation entitlement.

And let’s be honest - not allowing people to either take their vacation or carry it over to the coming year is probably going to result in your phone ringing off the hook as employees are suddenly struck down with a mysterious bug over the festive season and have to call in sick...

Eve Church

Eve Church

I'm a UK-based content writer here at Hezum. I've an interest in all things HR and company culture.

United Kingdom