Annual Leave Carryover Rules UK 2026: What Employers Need to Know
Every year, the same question comes up in HR inboxes across the UK: "Can my employees carry over their unused leave?" The answer depends on the type of leave, the reason it wasn't taken, and what your contract says. Get the rules wrong in either direction — allowing too much, or refusing a statutory right — and you risk either mounting liability or an Employment Tribunal claim.
This guide explains the carryover rules for each category of statutory leave, what you can and cannot restrict by contract, and how to set a sensible policy for your business.
The Two Types of Statutory Leave: Why It Matters
UK annual leave legislation splits the 5.6-week statutory entitlement into two distinct tiers, and they have different carryover rules:
- 4 weeks (20 days for full-timers): Derived from the EU Working Time Directive, sometimes called "Regulation 13" leave
- 1.6 weeks (8 days for full-timers): Additional UK statutory leave, sometimes called "Regulation 13A" leave
Most employers simply offer 5.6 weeks (or more) as a combined entitlement and don't distinguish between the two types — but the distinction matters enormously when it comes to carryover.
Default Rule: Leave Cannot Be Carried Over
The default position under the Working Time Regulations is that statutory leave cannot be carried over to the following leave year. Workers are expected to take their leave in the year it is accrued, and employers must actively facilitate this — including giving notice to workers to take their leave before the year ends.
The additional 1.6 weeks (Regulation 13A leave) can be contractually allowed to carry over. Many employers permit this in their contracts or policies, often with an expiry date in the following year (e.g., must be used by 31 March).
When Carryover Is a Statutory Right
There are specific circumstances where workers have a statutory right to carry over leave — meaning you cannot prevent it even if your contract says otherwise.
1. Sickness and Inability to Take Leave
If a worker is off sick and genuinely unable to take their annual leave during the leave year, they have the right to carry it over. Key rules:
- The 4-week (Regulation 13) entitlement must be carried over
- You can set a 15-month window within which carried-over leave must be taken
- Workers who are on long-term sick leave can accumulate leave during their absence and take it on return
- See our guide on holiday entitlement during sick leave for full details
2. Maternity, Paternity, and Other Parental Leave
Workers on statutory parental leave accrue annual leave throughout their absence. If the leave year ends during their parental leave — or if they cannot take their leave before the year ends due to parental leave — they have the right to carry over the full 5.6-week entitlement to the following leave year.
3. Where the Employer Prevents Leave Being Taken
If an employer actively prevents a worker from taking leave (e.g., refusing all requests during a busy period, operational reasons, or failing to give adequate notice to take leave), the worker can carry over leave and may be able to claim backdated holiday pay. Courts take a dim view of employers who allow leave to lapse through their own actions.
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What You Can Do by Contract
For the additional 1.6 weeks of statutory leave (and any contractual leave above 5.6 weeks), you have significant flexibility:
- You can allow carryover — with or without a cap on how many days
- You can set an expiry date — "carried-over leave must be used by 31 March"
- You can prohibit carryover — for contractual leave above the statutory minimum
- You cannot pay it out in lieu of statutory leave unless employment is terminating
COVID Carryover: Still Relevant?
During COVID, emergency legislation allowed workers to carry over up to 4 weeks of statutory leave for up to 2 years. The 2-year window started from 1 January 2020, meaning the last possible date for COVID carryover leave was 31 December 2023. This is now largely historical — any claims relating to COVID carryover should have been resolved by now.
Managing Year-End Leave: Practical Tips
A common headache for employers is the "year-end rush" — everyone booking leave in December because they haven't taken enough. Here's how to avoid it:
- Track leave balances in real time. Employees and managers should be able to see how much leave remains at any point. Annual leave management software makes this effortless.
- Send early warnings. Alert employees with high balances in October/November so they can plan.
- Set a minimum booking requirement. Some businesses require employees to book at least one week off per quarter.
- Be explicit in your policy. State clearly what carries over, what expires, and what exceptions apply.
Holiday Pay on Termination
When employment ends, any accrued but untaken statutory leave must be paid out as "payment in lieu." This applies to all categories of statutory leave — you cannot simply let it lapse. For each day owed, calculate the worker's average daily pay using the 52-week reference period.
Equally, if an employee has taken more leave than they have accrued at the point of termination, you can (if your contract allows) make a deduction from final pay to recover the overpayment.
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Key Takeaways
- Statutory leave cannot normally be carried over — workers must take it in the year it accrues
- Carryover is a statutory right when workers are sick, on parental leave, or prevented from taking leave
- The 1.6-week additional entitlement can be allowed to carry over by contract
- Any contractual leave above 5.6 weeks can be restricted however you choose in the contract
- COVID carryover provisions expired at end of 2023
- Accrued leave must always be paid out on termination