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Holiday Entitlement: Use it or lose it

In the UK, there is no automatic right to carry over holiday leave from one year to another and often UK employment contracts state that annual leave that is not taken will be lost.

However, in a recent European ruling, a German employee has won a claim for unpaid holiday pay arising from holiday he failed to take some 6 years ago.

In this case the European CJEU court ruled that the employee was entitled to compensation for his lost holiday because the employer did not take adequate steps to ensure that the employee was aware that he would lose his holiday if he did not request it.

With European legal decisions continuing to apply to the UK until Brexit and during any transition period, this case carries significance for UK employers.  Whilst companies can continue to adopt the ‘use it or lose it’ approach, they may have to consider how they implement this.

Whilst there is no definition of what would be considered as adequate notice, it is good practice for employers to provide employees with plenty of notice that they have unused holiday entitlement which they will lose should they not request it.  Providing this information in writing and keeping a record of this can also help to stop any later dispute that the employee was not aware of the consequences of not using their annual holiday entitlement.

It is important for employers to remember that the ‘use it or lose’ it approach does not apply to maternity leave (during which holiday continues to accrue) or for employees on long terms sick (where additional time should be allowed for them to take the annual leave).

If you would like futher advice relating to holiday entitlement or any other area of HR management, please contact us on 01302 341 344.

By Louise Turner – Dip Mgmt (Open) Assoc CIPDHR Business Partner








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