COVID-19: annual leave carry over rules to be relaxed

COVID-19: annual leave carry over rules to be relaxed

The rules on carrying over annual leave are to be relaxed to support key industries during COVID-19.

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Partner, KPMG Law

KPMG in the UK


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Workers who have not taken some or all of their statutory annual leave entitlement due to COVID-19 will be able to carry four weeks of accrued but untaken annual leave over into the next two leave years.

The current position

Under the Working Time Regulations 1998 (WTR 1998), full-time workers are entitled, as a minimum, to 28 days or 5.6 weeks’ holiday per year (including bank holidays). This is made up of 4 weeks (under regulation 13) and 1.6 weeks (under regulation 13A) of annual leave.

The current statutory position is that workers will lose the 4 weeks of annual leave if they do not take it during the relevant holiday year (with the exception of workers who have been unable to take annual leave due to sickness or maternity leave).

By agreement negotiated between employers and their workers, the additional 1.6 weeks of annual leave can be carried forward one leave year (but no further).

It is important to note that, to ensure their employees’ health and safety, employers are also under an obligation to make sure that their workers use up their statutory entitlement during the year. Unless the worker is leaving employment, this holiday cannot be replaced with a payment in lieu. If employers fail to comply with this obligation, they could receive a financial penalty.

What are the measures?

On Friday 27 March 2020, the Business Secretary Alok Sharma announced that workers who have not used up all of their statutory annual leave entitlement, due to COVID-19, will now be able to carry it over into the next two leave years.  

The Working Time (Coronavirus) (Amendment) Regulations 2020 (Regulations) will permit a maximum of up to four weeks of unused leave (i.e. the four weeks granted under regulation 13 WTR 1998) to be carried over into the next two leave years, where it was ‘not reasonably practicable’ for a worker to take some or all of that leave in the leave year as a result of the effects of COVID-19 (including effects on the worker, the employer or the wider economy or society). This will not apply to the 1.6 weeks leave granted under regulation 13A WTR 1998.

The Regulations also introduce a restriction on an employer’s right to refuse leave on particular days. Under regulation 15(2) WTR 1998, an employer may require a worker not to take leave on particular days (by giving the worker notice that complies with the formalities set out in regulation 15(3)). Under the new regulation 13(12) WTR 1998 (inserted by regulation 3 of the Regulations) the employer will only be able to prevent a worker from taking carried over leave on particular days where the employer has ‘good reason’ to do so. However, the Regulations do not define a ‘good reason’ for this purpose.

These changes will apply to all employers and employees who are subject to the WTR 1998 (and not just to ’key workers’ for the purposes of COVID-19).

What do the measures mean for businesses?

The Regulations will ease the obligation which businesses are under to make sure that workers use up their statutory amount of annual leave in any one year. 

This will also result in businesses affected by COVID-19 having the flexibility to permit workers to carry over leave at a time when, in certain key industries such as food and healthcare, granting annual leave could leave them short-staffed. This will ensure that workers can, continue working in the national effort against COVID-19 without losing out on their annual leave entitlement. 

How KPMG can help?

KPMG’s expert employment legal and tax teams are experienced in dealing with all sorts of annual leave and holiday pay advice. Please get in touch if you need help.

If you have any queries, please get in touch with Donna Sharp, Director and Solicitor, Employment Legal Services at KPMG in the UK, your normal contact or e-mail

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