How to deal with employees leaving it too late to use their holiday entitlement.
As many businesses approach the end of their holiday year, it’s common to see a rush of last-minute leave requests. Employers often ask whether they can operate a “use it or lose it” approach—and employees often ask whether unused holiday must be carried over.
The answer is: a “use it or lose it” policy can be lawful, but only if it’s applied in a way that genuinely allows staff to take their statutory entitlement and complies with the Working Time Regulations 1998 (WTR).
What is the minimum holiday entitlement?
Most workers are entitled to 5.6 weeks’ paid holiday per leave year (that’s 28 days for someone working 5 days a week). Many employers provide more as a contractual benefit.
Can unused holiday be lost at the end of the holiday year?
In principle, yes—but it depends on the circumstances
A “use it or lose it” approach is generally workable if:
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employees have had a real opportunity to take holiday during the leave year; and
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your policy and communications make clear how to book leave and what happens if it isn’t taken.
Where staff have chosen not to take holiday despite being able to do so, the default position is usually that unused statutory leave does not automatically carry over (subject to the exceptions below and any contractual carry-over rules).
Key exceptions where carry-over may apply
Carry-over can be required (or strongly advisable) where workers were unable to take leave due to particular circumstances, including:
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Family-related leave (e.g. maternity/parental leave): workers can carry over up to 5.6 weeks.
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Sickness absence: commonly, carry-over applies to up to 4 weeks (the EU-derived element of statutory leave), and it must usually be taken within 18 months of the end of the leave year in which it accrued.
Practical tip: if someone has been off sick long-term, don’t assume holiday “expires”. Review what’s accrued and what can lawfully be carried over.
Booking leave: what notice rules apply?
Workers must give notice to take leave. Employers can also refuse a request (or cancel leave), but must give the required notice.
Government guidance summarises the default rules as:
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worker notice: generally at least twice the length of the leave requested (plus 1 day); and
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employer refusal/cancellation notice: generally at least the same length as the leave requested (plus 1 day).
The underlying WTR provisions on dates when leave is taken are in Regulation 15 (subject to any workforce/collective agreement varying this).
Carry-over by agreement: what if your contract allows it?
Many employers allow a limited carry-over (for example, up to 5 days into the first quarter of the next leave year). That can be sensible for operational reasons, provided it’s set out clearly in:
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the employment contract; or
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a holiday policy that forms part of the contract; or
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a workforce/collective agreement.
ACAS confirms carry-over can be permitted where there’s a relevant agreement in place.
Special update: irregular hours and part-year workers (changes from 2024)
Holiday entitlement and pay rules were reformed from 1 January 2024, with an accrual approach for irregular hours and part-year workers applying for leave years beginning on or after 1 April 2024 (with holiday generally accruing across the year).
If you employ casual, variable-hours, term-time or seasonal staff, it’s worth checking your holiday processes align with the post-2024 framework.
How employers can manage end-of-year holiday requests fairly (and reduce risk)
Here’s a practical, HR-friendly approach:
A) Make the rules crystal clear (and repeat them)
Your policy should set out:
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holiday year dates;
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entitlement (statutory + contractual);
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how to request leave;
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approval process and timescales;
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any carry-over rules; and
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what happens if leave isn’t taken. ()
B) Encourage take-up throughout the year
Don’t wait until the last month. Consider:
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quarterly holiday balance reminders;
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manager dashboards (who has >X days remaining); and
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prompts for employees who repeatedly “save” leave until year-end.
C) Plan operationally for peaks
If you know December (or summer) always brings a flood of requests:
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set transparent “blackout” periods only where genuinely necessary; and
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encourage early booking for popular weeks.
D) If you refuse leave, be careful
Refusing leave repeatedly without providing workable alternatives can create disputes and undermine the “use it or lose it” stance. If operational needs mean you must refuse, offer alternative dates.
What about payment in lieu instead of taking holiday?
During employment, statutory holiday is intended to be taken as time off, not “cashed out” routinely. Payment in lieu is generally associated with termination (for accrued untaken holiday).
If you’re seeing repeated end-of-year problems, it’s usually a sign your policy, resourcing, or management approach needs tightening—not that holiday should be bought back.
When to take advice
Get advice early if:
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you have long-term sick employees with significant untaken leave;
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there is a dispute about whether leave could realistically have been taken;
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you employ a large irregular-hours/part-year workforce and need to audit holiday compliance post-2024; or
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you are changing holiday year dates, accrual methods, or contractual terms (which may require consultation/agreement).
Need help?
DTM Legal’s Employment & HR team can help you:
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review holiday policies and carry-over rules,
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manage year-end surges in requests,
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handle holiday disputes, and
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ensure your approach aligns with the post-2024 holiday entitlement and pay framework.
This article is for general information only and does not constitute legal advice. Specific advice should be taken for your particular circumstances.
For more information about policies on holiday entitlement, managing employee expectations or to discuss HR or employment law queries in general, please contact Tom Evans.
