Managing Annual Leave in 2021

Following the unprecedented impact of COVID 19 and the subsequent furlough scheme many businesses now have employees with excess accrued annual leave that needs to be taken (changes within businesses – cancelling holidays due to demands on business, or furloughing employees building up unused annual leave).



Annual leave Carry Over

In March 2020 the UK Government passed emergency legislation to amend the Working Time Directive to all allow employees the right to carry forward upto 4 weeks (from 2020 allocation). This is only the case if it is not “reasonably practicable” to take it is the current leave year. Unused annual leave must be taken within the next 2 years period.

Have you updated your Annual Leave Policy?

At this time is more important the ever to have a clearly defined annual leave policy as it will make employees fully aware of:

• How annual leave is allocated?
• Numbers of people who may take time off at the same time
• Timescales between booking and taking annual leave
• The company’s position of mandatory or self isolation following holidays abroad
• Compulsory shut down periods
• Key trading periods where annual leave may not be taken
• The taking of annual leave whilst on furlough
• When payment of annual leave in lieu will be made

Forced Annual Leave

Employers have a right to decide when to allow an employee to take leave and therefore the right to decline a request for annual leave from an employee. However, in order to do so you must give the employee double the leave period in notice.

e.g.  For 1 weeks leave the employer must be give 2 weeks’ notice beforehand.

Many businesses confirm their compulsory shut downs for periods like Christmas and summer holidays at the beginning of each leave year.

However, if you do cancel an employee’s pre-booked leave, there may be a knock unintended complication, affecting the employee’s morale, incurring a financial loss and if without good business reason an employer could be faced with a claim for constructive dismissal so, any decisions should be considered, explained and recorded.

Despite passing emergency legislation in 2020 the UK government still expects employers to encourage employees to use their leave where possible and they have clearly specified the reasons why carry over will be allowed.

Employers will need to actively manage annual leave as the UK eases out of lockdown. The need to balance business needs and ensuring employees utilise annual leave to relieve stress as well as an employee’s well-being by having downtime.

Annual Leave during Furlough, Reducing outstanding Annual Leave Financial Liability

Employers who still have employees furloughed could consider placing furloughed employees on annual leave this way 80% of the cost of the annual leave is covered by the furlough scheme the business only need to pay the remaining 20%. Any enforced holiday or leave period are subject to the required notice periods. However, an employer must remember that employees can only be on furlough if coronavirus is affecting their business operations, not solely because they are due to take annual leave.

Homeworking Employees

Home working can be stressful at the best of times. If an employee has carried over annual leave from 2020 allocation, consider making them take a half day holiday per week/per month for their own wellbeing. You will need to give them sufficient notification as advised above (see forced annual leave).

Lieu of Payment

Employers are not allowed to make payment in lieu of any statutory (5.6 weeks) annual leave not taken. Payment may only be made upon termination of employment for untaken annual leave.

Holidays abroad

With the world opening up again the company should clearly define its position for employees wishing to take holiday abroad, Will employees returning from abroad needing self isolate be:

• Paid by the company during the self isolation period
• Required to use additional annual leave
• Required to take unpaid leave

Do you have plans that allow your business cope with a 4 or 6 week absence?

Managing Absence

A good way to help manage employee’s annual leave / sickness / unauthorised absence is via specialist HR software. This not only makes the recording of absences easier but helps you identify absence patterns, such same day off every month, or more than one employee taking the same time off regularly etc.