Holiday Carry-Over Rules UK: What Employers Need to Know
- Trefnus
- 7 days ago
- 9 min read
Published: June 2026 | Last reviewed: June 2026
holiday carry-over rules UK - Introduction
Managing annual leave is one of the more nuanced areas of employment law for UK businesses. When employees approach the end of the leave year with untaken holiday, employers face a question that is deceptively simple on the surface but legally complex in practice: can that holiday be carried over?
The rules around holiday carry-over in the UK were clarified and codified from 1 January 2024 through amendments to the Working Time Regulations 1998. More recently, the Employment Rights Act 2025 introduced new record-keeping obligations that significantly raise the compliance stakes. Getting this wrong carries real risk, from employment tribunal claims to, as of April 2026, potential criminal liability punishable by a fine for inadequate record-keeping.
This article explains the current legal position on holiday carry-over in the UK, including who can carry over leave, how much, and under what circumstances, so that small business owners and HR managers can handle this area with confidence.
Understanding the Statutory Annual Leave Entitlement
Before examining carry-over, it helps to understand the structure of statutory holiday entitlement in the UK. Under the Working Time Regulations 1998, most workers are entitled to 5.6 weeks of paid leave per year. For a full-time employee working five days a week, this amounts to 28 days.
Crucially, this entitlement is made up of two distinct parts:
Regulation 13 leave: the first four weeks (20 days for a five-day week), originally derived from EU law. This is the core health and safety protection.
Regulation 13A leave: the additional 1.6 weeks (8 days for a five-day week), a UK-specific supplement.
This split matters because the two portions carry different carry-over rules. Many employers treat all 28 days as a single block, but the legal position draws a clear distinction between them.
The Default Rule: Use It or Lose It
The default position under the Working Time Regulations is that statutory annual leave must be taken within the leave year in which it falls due. Untaken leave cannot simply be carried forward, and employers cannot pay employees in lieu of untaken statutory leave, except on termination of employment.
Employers can, however, operate a "use it or lose it" policy for the additional 1.6 weeks (Regulation 13A leave) if no written agreement permitting carry-over is in place, provided they have fulfilled their obligations to give workers a reasonable opportunity and encouragement to take leave. For the core four weeks (Regulation 13 leave), the position is stricter: this leave is treated as a health and safety entitlement, and employees cannot simply waive it.
The important caveat is that a use-it-or-lose-it policy is only lawful if the employer has actively met its obligations towards the employee, including clearly communicating entitlements, providing a reasonable opportunity to take leave, and encouraging workers to do so before the year end.
When Holiday Carry-Over Is Permitted
The law identifies several circumstances in which employees have a statutory right to carry over unused holiday entitlement. Following amendments to the Working Time Regulations that took effect from 1 January 2024, these circumstances are now explicitly set out in domestic legislation.
1. Long-Term Sickness Absence
Where an employee is unable to take their Regulation 13 leave (the core four weeks) because of long-term illness or injury, they are entitled to carry it over into the following leave year. This carry-over entitlement must be used within 18 months of the end of the leave year in which it accrued.
This reflects the long-established principle from EU case law that a worker should not lose their health and safety holiday entitlement simply because illness prevented them from taking it.
2. Maternity, Paternity, and Other Family-Related Leave
Employees who are unable to take holiday during a period of statutory family leave, such as maternity, paternity, adoption, shared parental, and other statutory family-related leave, are entitled to carry their full 5.6 weeks of statutory entitlement into the following leave year. There is no 18-month time limit for this category; the leave simply rolls into the next year for the employee to take.
3. Where the Employer Has Failed in Its Obligations
The 2024 amendments also clarified a third scenario: where an employer has failed to recognise an employee's right to paid leave, has not given them a reasonable opportunity to take it, or has not informed them that untaken leave not carried forward will be lost, unused statutory leave may carry over until the worker has been given a genuine opportunity to take it. In practical terms, this places a positive duty on employers to actively facilitate leave-taking rather than simply leaving it to employees to book their own time off.
4. Contractual Carry-Over by Agreement
Outside of the statutory carry-over rights above, employers may agree by contract to allow additional carry-over. Many businesses permit employees to roll over a set number of days (commonly up to five) as a staff benefit, provided this is clearly stated in the employment contract or staff handbook. Any such agreement should specify how many days may be carried over and set a deadline by which the carried-over leave must be taken in the new year.
Holiday Carry-Over at a Glance
Circumstance | Leave That Can Be Carried Over | Time Limit |
Long-term sickness absence | Up to 4 weeks (Regulation 13) | Must be used within 18 months of end of accrual year |
Maternity / family-related leave | Full 5.6 weeks statutory entitlement | Carried into next leave year (no 18-month cap) |
Employer failed in its obligations | Unused statutory leave may carry over until a genuine opportunity to take it has been provided | Determined by circumstances |
Contractual agreement (voluntary) | As specified in employment contract | As specified in employment contract |
No agreement, no qualifying reason | None (use it or lose it applies) | N/A |
A Note on Covid-19 Carry-Over Leave
During the pandemic, temporary regulations allowed employees to carry over up to four weeks of annual leave across two consecutive leave years if it was not reasonably practicable to take it due to Covid-19. Those temporary provisions expired on 1 January 2024. The temporary Covid-19 carry-over regime is no longer available for new accruals and should now have little practical relevance for most employers.
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Employer Obligations: More Than Just Allowing Time Off
One of the most significant practical implications of the 2024 changes is the shift in responsibility onto employers. It is no longer sufficient to make holiday available in theory; employers must take active steps to ensure workers can and do take it.
Specifically, employers should:
Communicate leave entitlements clearly at the start of each leave year.
Send reminders throughout the year, particularly as the year-end approaches.
Approve leave requests reasonably and not operate blanket refusal periods that effectively prevent workers from using their entitlement.
Inform employees in writing that any leave not taken and not eligible for carry-over will be lost.
Keep records of leave taken, leave carried over, and any related communications.
Employers who fail to take these steps risk losing the protection of their use-it-or-lose-it policy, with employees potentially accruing carry-over rights as a result.
New Record-Keeping Requirements from April 2026
A significant development for UK employers came into force on 6 April 2026. Under Section 35 of the Employment Rights Act 2025, all employers are now legally required to keep adequate records demonstrating compliance with their workers' holiday entitlements and holiday pay obligations.
These records must include:
Each worker's annual leave entitlement, including how it was calculated.
Leave actually taken during each leave year.
Any leave carried forward from previous years, including the reason for the carry-over.
Holiday pay calculations, including any commission or overtime elements included.
Any payments made in lieu of untaken leave on termination.
Records must be retained for six years and may be kept in any format the employer reasonably considers appropriate. Critically, failure to maintain adequate records is now a criminal offence punishable by a fine, enforceable by the newly established Fair Work Agency. This represents the most significant compliance obligation in the holiday records space, and many smaller employers are currently unprepared.
If your business does not already have a reliable system for recording leave entitlements, carry-overs, and balances, April 2026 is a compelling reason to put one in place promptly.
Carry-Over Rules for Irregular Hours and Part-Year Workers
Further changes affecting workers with variable hours apply to leave years beginning on or after 1 April 2024. Holiday entitlement for irregular hours workers and part-year workers is now calculated using a 12.07% accrual method applied to actual hours worked each pay period.
For these workers, carry-over rules broadly mirror those for regular employees: unused leave accrued during a period of sickness or family-related absence may be carried forward and must be taken within 18 months of the end of the leave year in which it accrued. Employers using rolled-up holiday pay for these workers must still maintain accurate records of leave accrued and taken, as the record-keeping obligations apply equally to this category.
Frequently Asked Questions
Can an employer refuse to allow holiday carry-over?
An employer can operate a use-it-or-lose-it policy for the additional 1.6 weeks of statutory leave and for any contractual leave above the 28-day minimum, provided this is clearly set out in the employment contract. However, employers cannot refuse to allow carry-over in the circumstances where statute requires it, namely sickness absence, family-related leave, or where the employer has failed to facilitate leave-taking. Attempting to enforce a blanket no-carry-over policy in those situations would be unlawful.
Do carried-over days need to be paid out if the employee leaves?
Yes. If an employee leaves their employment with unused statutory leave, including any leave legally carried over from a previous year, they are entitled to a payment in lieu of that untaken leave as part of their final pay. This applies to both the Regulation 13 and Regulation 13A portions of statutory entitlement. Any contractual leave above the statutory minimum should be dealt with according to the terms of the employment contract.
How long does an employee have to use carried-over holiday from sickness absence?
Where leave is carried over because of long-term sickness absence, it must be taken within 18 months of the end of the leave year in which it accrued. For example, if an employee is unable to take their leave during a leave year running from 1 January to 31 December 2024, the carried-over entitlement must be used by 30 June 2026. After that date, the employer may lawfully permit the entitlement to lapse, provided the employee was given a reasonable opportunity to take it during the 18-month window.
Can employees carry over holiday that they simply forgot to book?
Generally, no. If an employee simply chose not to book their leave, and the employer communicated entitlements clearly, offered a reasonable opportunity to take leave, and reminded staff that unused leave would be lost, the leave will lapse at the end of the year. The key exception is where the employer failed to meet its obligations. If the employer did not properly communicate the deadline or actively prevented the employee from taking leave, the employee may acquire carry-over rights as a result of the employer's conduct.
What happens to carry-over holiday if a new leave year starts and the employee is still on sick leave?
If an employee remains on long-term sick leave as a new leave year begins, they continue to accrue fresh entitlement in the new year. The carried-over entitlement from the previous year does not expire immediately; it remains available to be taken during the 18-month window. Employers should track carried-over balances separately from current-year entitlement to avoid confusion when the employee returns, and to demonstrate compliance with the record-keeping requirements in force from April 2026.
Do bank holidays count towards carry-over?
Bank holidays are not automatically part of statutory holiday entitlement under the Working Time Regulations. Whether bank holidays form part of a worker's leave entitlement depends on the terms of the employment contract. Many contracts grant 20 days plus bank holidays, bringing the total to 28 days; in that case, bank holidays sit within the overall entitlement and the usual carry-over rules apply.
Where contracts express entitlement as 28 days inclusive of bank holidays, the same applies. Employers should review their contract wording carefully, as some arrangements can inadvertently leave employees below the 28-day statutory minimum in years with fewer than eight public holidays.
Further Reading and Official Guidance
The following authoritative sources provide detailed guidance on the topics covered in this article:
Acas: Carrying over holiday entitlement - practical guidance on carry-over rules for employers and workers.
GOV.UK: Holiday entitlement - official government guidance on statutory annual leave rights.
Working Time Regulations 1998 (legislation.gov.uk) - the primary legislation governing holiday entitlement and carry-over.
Employment Rights Act 2025 (legislation.gov.uk) - including the new record-keeping requirements effective from 6 April 2026.
Conclusion
Holiday carry-over in the UK is more structured than it may first appear. The default position is that statutory leave must be taken within the leave year, but several circumstances, including sickness absence, family-related leave, and employer failure to facilitate leave-taking, create binding rights for employees to carry unused entitlement forward.
The 2024 changes to the Working Time Regulations clarified many of the rules that had previously relied on EU case law, giving employers clearer guidance to follow. And with the introduction of mandatory holiday record-keeping from 6 April 2026, businesses now have a legal obligation to maintain accurate records of entitlements, carry-overs, and pay, with criminal sanctions for failure to comply.
For small and medium-sized businesses, the practical answer to managing this complexity is a reliable leave tracking system that records each employee's entitlement, flags carry-over balances, and ensures nothing falls through the gaps. Trefnus Staff is built for exactly this purpose. If you would like to try it, apply for beta access and be among the first to use the tool as it enters general release.
Disclaimer
The information in this article is intended for general guidance only and does not constitute professional legal, financial, or regulatory advice. Employment law can change, and the rules described here reflect the position as understood at the time of publication. Always consult a qualified solicitor or HR professional for advice specific to your circumstances.
