Managing Annual Holiday Entitlement in 2021

Managing Annual Holiday Entitlement in 2021. Step Two of the Governments Road Map to easing Lockdown Three Restrictions allowed campsites and holiday lets to reopen, in England, where indoor facilities are not shared with another household group and Step Three of the Roadmap permits UK holidays for groups of 6 or for a larger group where there are only 2 households in total. The Prime Minister is expected to make an announcement on or around 10 May 2021 about when foreign travel may resume. This means employees will now be starting to plan holidays for the summer or later in the year.


Updated guidance is released regularly and I will update this page as more details are announced.

This page was firstly published on 30 April 2021 and the last update was 4 May 2021.

Regardless of whether your employees have worked through the pandemic or been fully or part furloughed you will no doubt have a large amount of accrued but unused holiday entitlement that they now want to use. So how do you manage those requests and ensure you always have adequate staffing levels?

General Principles

The Working Time Regulations 1998 grant a statutory right to 5.6 weeks’ paid holiday each year. This consists of two elements:

  • 4 weeks holiday leave is derived from the Working Time Directive, and
  • 1.6 weeks additional leave is a UK legal right.

Typically, the statutory 4 weeks’ leave a worker is entitled to under EU law can only be taken in the year the worker was entitled to it, with exceptions in relation to sickness or maternity leave. Any leftover entitlement cannot be given as a payment in lieu unless the employment is terminated, therefore unused entitlement is lost. It is however possible to carry over 1.6 weeks into the following holiday year if mutually agreed by both parties.

There is also an obligation on employers to ensure that there is adequate opportunity for workers to take their holiday entitlement. Failure to do so could result in financial penalty.

Carry Over of Annual Holiday Entitlement

The amended Working Time Regulations allow workers, where it is not reasonably practicable for them to take some, or all, of the holiday they are entitled to due to Coronavirus, to carry over up to four weeks of their unused statutory holiday into the next two holiday years.

The rules are not restricted to certain industries or types of workers (for example, “key workers”). Instead, they simply require the worker to have been prevented from taking holiday because of coronavirus, including effects “on the worker, the employer or the wider economy or society”.

The carry-over is permitted into the two leave years immediately following the leave year in which it was due to be taken. So, if your holiday year runs from January to December employees would be able to carry unused holiday entitlement from the 2020 holiday year into the 2021 and 2022 holiday years and if your holiday year runs from April to March employees would be able to carry over unused entitlement from the 2020-21 holiday year into the 2021-22 and 2022-23 holiday years.

Furloughed Employees

The updated guidance clarifies circumstances in which the need to carry over holiday may arise and, helpfully, notes that employees on furlough are unlikely to need to carry forward statutory annual leave, as they will, in most cases, be able to take it during the furlough period. The guidance goes on to say, however that if, due to the impact of coronavirus on operations, the employer is unable to fund the difference between the furlough payment and ‘full’ holiday pay, then it is likely that this would make it not reasonably practicable for the employee to take their leave, thus enabling the worker to carry their annual leave forward. So, in short, if you are unable to Top Up pay to 100% for a ‘holiday’ period you must allow the employee to take (and be paid for) that period of holiday again at some point in the future.

Working Employees

The temporary changes ensured all employers affected by the Coronavirus through increased working hours and increased levels of sickness absence have the flexibility to allow workers to carry over holiday when granting annual holiday could leave them short-staffed. There needs to be some link back to the coronavirus pandemic to explain why the employee has not been able to take the holiday in question. In practice this test is going to be relatively easily met, since if both parties agree holiday should be carried over, there is going to be no one to dispute the necessary linkage back to the challenges created by the coronavirus.

Holiday Entitlement on Termination of Employment

It is acceptable to require an employee who is serving out their notice to use up some or all of their accrued holiday entitlement before the termination date.

You can insist by giving appropriate notice or because it is clearly expressed in the contract of employment that a worker takes any holiday owed to them as part of their notice period.

To eliminate or reduce significantly the cost of holiday on termination over the next couple of years build into your resignation acceptance letters that you may ask the employee to use accrued but unused holiday during the notice period.

Restrictions on Taking Annual Holiday Entitlement

Ordinarily, an employer can prevent annual leave being taken at certain times if the requisite notice formalities are met for instance restrictions on holidays during December are common in the hospitality and retail sectors.

The Coronavirus temporary amendments mean that an employer will only be able to require a worker not to take carried-over leave on particular days where they have a “good reason” to do so. “Good reason” for this purpose has not been defined, although genuine operational reasons are likely to be sufficient.

Enforced Holiday

Furloughed Employees

On 13 May 2020 the Government updated their holiday guidance to state that employers can force a furloughed employee to take a period of holiday.

This means if you are worried about a furloughed employee returning to work with an excessive amount of holiday you can ask them to take a period of holiday whilst they are furloughed. The required notice period is double the length of the holiday you require an employee to take i.e. for a period of 5 days holiday, you would need to provide 10 days’ notice.

The guidance goes on to say, however, ‘that where an employer requires an employee to take holiday while on furlough, the employer should consider whether any restrictions the employee is under, such as the need to socially distance or self-isolate, would prevent the employee from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday’. As such, whilst the government’s view is that you can require holidays to be taken during furlough, an employer requiring an employee to take a significant portion of their annual entitlement during ‘lockdown’ and particularly the more rigid version of ‘lockdown’ that was initially in place, could still face a challenge by way of an employment tribunal claim that they have not had the opportunity to enjoy their holiday. It is important to note that the government guidance, while persuasive, would not be binding on an employment tribunal.

Working Employees

In terms of the Working Time Regulations, you can give notice to a worker that they must take annual leave on specified dates. The notice must be at least twice the length of the period of leave that the worker is being ordered to take. So, if you want to insist on a worker taking two weeks’ leave, you must give at least four weeks’ notice.

Rather than issuing formal notice requiring workers to take holidays, there is also the option of asking workers to take a certain number of days holiday, or percentage of their holiday entitlement, by a specified date.

Cancelling an Employee’s Holiday

If you are short staffed or have an increased work load and don’t’ want employees to take holiday they had pre-booked you can cancel the holiday or request employees don’t take holiday on particular dates.

If you intend to cancel a period of holiday you must:

  • provide the employee with at least the length of holiday the employee had booked i.e. to cancel 5 days of holiday you would need to provide 5 days’ notice, and
  • have a good reason for the cancellation and act reasonably, including considering any financial loss to the employee if they are unable to take the holiday.

Failure to act reasonably would breach the duty of trust and confidence between you and your employee and would jeopardise the relations you have with the rest of your workforce.

Dealing With Multiple Holiday Requests For The Same Period

In terms of the Working Time Regulations, you can refuse a request for annual leave, provided you give as much notice as the amount of leave requested (so two weeks’ notice if two weeks’ leave is requested). However, many contracts of employment override this rule and state that an employee must comply with your holiday procedure, and that you can refuse requests. So check the wording of your contract of employment and annual holiday policy.

Neutral criteria should always be applied when prioritising competing holiday requests e.g. first come first served; or by rotation (so if someone has been denied their request on a previous occasion, they then get priority the next time). If you have an annual leave policy, it could include details of how you will manage competing requests.

Strictly speaking, someone with a protected characteristic does not get automatic preference over someone without – but bear in mind the additional discrimination risk that could arise if you refuse a request to someone with protected rights (e.g. a female employee with primary childcare responsibilities who requests time off over the school holidays).

Template Holiday Request Form

My Holiday Request From is designed to be used by all staff to request and seek approval for periods of holiday. The form has been updated to include reference to the problems associated with travelling abroad due to the Coronavirus Pandemic.

To download the Template Holiday Request Form, complete your details below and an email containing the document will find its way to your inbox:

Download the Template Holiday Request Form Now!

If you have any questions, please call me on 0114 360 0626 or simply email me at

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Managing Annual Holiday Entitlement in 2021