Managing Annual Leave Requests: UK Employer's Guide

Managing annual leave requests sounds simple until you face competing requests for the same week, a part-time employee who insists on all bank holidays off, or a leaver who has used more holiday than they have accrued. These situations come up constantly, and handling them incorrectly can lead to claims for unlawful deduction from wages, discrimination, or breach of contract.

This guide covers the practical challenges of managing annual leave in a UK business, building on our statutory holiday entitlement guide with day-to-day operational advice.

The legal minimum

Under the Working Time Regulations 1998, all workers are entitled to a minimum of 5.6 weeks' paid annual leave per year. For someone working 5 days per week, this is 28 days. This is the statutory maximum that the regulations require — employers are not legally obliged to provide more than 28 days, though many choose to.

The 28-day entitlement can include the 8 usual UK bank holidays. There is no standalone legal right to take bank holidays off — whether bank holidays are included in or additional to the statutory 28 days is determined by the employment contract.

Handling leave requests

Your right to refuse

Employers can refuse annual leave requests, provided they give adequate counter-notice. The notice to refuse must be at least as long as the period of leave requested. For example, to refuse a request for 5 days' leave, you must give at least 5 days' notice of the refusal.

However, you cannot unreasonably prevent employees from taking their statutory leave. If repeated refusals mean an employee cannot use their entitlement within the leave year, you could face a claim under the Working Time Regulations.

Dealing with competing requests

When multiple employees request the same dates, you need a fair and transparent system. Common approaches include first-come-first-served, rotation (different employees get priority in different periods), team-based limits (a maximum number of people off from each team at any time), and seniority-based systems (though be careful about indirect age discrimination).

Mandatory leave periods

You can require employees to take leave during specific periods — such as a Christmas shutdown or factory closure. To do this, you must give notice at least twice the length of the leave period. For example, for a 1-week Christmas shutdown, give at least 2 weeks' notice. This leave counts against the employee's statutory entitlement.

Bank holidays and part-time workers

This is one of the most frequently mishandled areas of annual leave management.

The problem

A full-time employee (5 days per week) working Monday to Friday gets 8 bank holidays as part of or in addition to their 28-day entitlement. A part-time employee working only Mondays, Tuesdays, and Wednesdays rarely falls on a bank holiday. If bank holidays are given as additional leave, the full-timer effectively gets more total leave.

The solution: pro-rata bank holidays

Part-time workers must receive the same total leave entitlement pro-rata as full-time workers. The simplest approach is to calculate the total entitlement (including bank holidays) and pro-rate it.

Example: If full-time employees get 28 days including bank holidays:

A worker on 3 days per week gets: 3 x 5.6 = 16.8 days total

If the part-time worker's working days do not fall on bank holidays, they simply have 16.8 days to use whenever they choose. If some bank holidays fall on their working days, those days are deducted from the 16.8.

Use our PTO Accrual Calculator to calculate the precise entitlement for any working pattern.

Carry-over rules

The rules on carrying over unused leave are more nuanced than many employers realise. The statutory entitlement is divided into two components, each with different carry-over rules.

The first 4 weeks (20 days for full-time)

This derives from the EU Working Time Directive (retained in UK law). In principle, these 20 days must be taken in the leave year and cannot be carried over — unless the worker was unable to take them due to sickness, maternity or other family leave, or the employer prevented or discouraged them from taking leave.

The additional 1.6 weeks (8 days for full-time)

This derives from UK regulations. It can be carried over into the next leave year if there is a written agreement — typically set out in the annual leave policy or employment contract.

Carry-over after sickness absence

Following the Plann v NHS South East Coast decision and subsequent case law, employees who are unable to take holiday due to long-term sickness can carry over untaken leave. The carry-over right is limited to the 4-week EU-derived entitlement and must be used within 18 months of the end of the leave year in which it accrued (following the TSN v King decision).

For more on managing sickness and its interaction with leave, see our sickness absence guide.

Carry-over after maternity and family leave

Holiday continues to accrue throughout maternity leave, paternity leave, and shared parental leave. An employee on 52 weeks of maternity leave will accrue a full year's holiday entitlement. This must be allowed to carry over into the next leave year if it could not be taken during the leave year due to the family leave.

See our maternity and paternity leave guide for full details.

Holiday pay calculations

Getting holiday pay right is critical and has been the subject of extensive case law.

Normal hourly or salaried workers

For employees with regular hours and pay, holiday pay is straightforward — they receive their normal pay during annual leave.

Variable hours and overtime workers

Following a series of tribunal and court decisions, holiday pay for the first 4 weeks of leave must reflect the worker's normal remuneration, including regular overtime (both compulsory and voluntary, if worked with sufficient regularity), commission, and other regular payments.

The remaining 1.6 weeks can be paid at basic pay only.

For workers with variable hours or no normal working hours, holiday pay for each day is calculated as 1/52 of the total pay received in the previous 52 weeks (excluding any weeks in which no pay was received — look back further to find 52 paid weeks).

Leavers: holiday entitlement on termination

When an employee leaves — whether they resign, are dismissed, or are made redundant — you need to settle their holiday account.

Accrued but untaken leave

The employee is entitled to a payment in lieu of any statutory leave accrued but not taken up to their leaving date. Calculate the accrued entitlement pro-rata based on the proportion of the leave year they have worked.

Example: An employee with 28 days' annual leave leaves exactly halfway through the leave year. They have accrued 14 days. If they have taken 10, they are owed pay for 4 days.

Overtaken leave

If the employee has taken more leave than they have accrued, you may be able to deduct the overpayment from their final pay — but only if the employment contract explicitly permits this. Without a contractual right to deduct, you cannot claw back the overpayment from wages, as it would constitute an unlawful deduction.

Garden leave and holiday

If an employee is placed on garden leave during their notice period, you can require them to take any remaining annual leave during the garden leave. You must give proper notice as described earlier (counter-notice at least as long as the leave period).

Tracking and administration

Leave year

Your leave year can run from any date — 1 January to 31 December, 6 April to 5 April, or any other 12-month period. If the contract does not specify, the leave year starts on the anniversary of the employee's start date.

Accrual for new starters

In their first year of employment, statutory leave accrues at 1/12 of the annual entitlement per month worked. Employees can begin taking leave as soon as it accrues. Some employers allow new starters to take leave in advance of accrual, but this creates a risk if the employee leaves early.

Record keeping

Maintain accurate records of leave entitlements, requests, approvals, and leave taken. Under the Working Time Regulations, you must keep records showing that the maximum leave entitlement is not being exceeded. Good records also protect you in disputes about remaining entitlement and final pay calculations.

Frequently asked questions

Next steps

Key takeaways

Annual leave management requires a clear policy, consistent application, and accurate record keeping. Pro-rate correctly for part-time workers, handle bank holidays fairly, understand the carry-over rules for both the 4-week and 1.6-week components, and ensure your contracts include a clawback clause for overtaken leave on termination. Use our PTO Accrual Calculator to handle the maths, and keep your employment contracts up to date with clear leave terms.