New holiday pay rules: carry-over
The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 have been published by the government and came into force on 1st January 2024.
One of the key areas covered in the regulations is the question of whether accrued but untaken annual leave can be carried over from one holiday year to the next. The position is set out as follows:
Regulation 13 annual leave (4 weeks per year) will carry-over in the following circumstances:
if it is unable to be taken due to sickness, as long as it is used within 18 months
if it is unable to be taken due to the employee taking statutory leave (e.g. maternity, adoption and shared parental leave) it is carried over to the following holiday year
if the right to paid leave is not recognised, then it carries over until one year has elapsed where holiday is taken and paid correctly
if the employer doesn’t give reasonable opportunity to take leave or encourage it, then it carries over until one year has elapsed where holiday is taken and paid correctly
if the employer doesn’t warn employees of the risks of losing their holiday entitlement at the end of the holiday year, then it carries over until one year has elapsed of it being taken and paid correctly
The new leave entitlement for part-year and irregular hours workers under Regulation 15B Working Time Regulations 1998 have the same carry-over rules as Regulation 13 leave.
Regulation 13A annual leave (1.6 weeks per year) will carry-over in more limited circumstances. Where an employee is absent due to sickness (provided it is taken within 18 months) and where an employee is absent on statutory leave. There is also the possibility of agreeing carry-over of this portion of leave by way of a relevant agreement made with the employee.
Contact Oliver to discuss this further.
