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Can employees carry over annual leave to the next year?

Up to now the answer has been NO.

It was a case of ‘Use it or Lose it’. If you were off sick at the time you were supposed to be on holiday and you did not have time to take that holiday again in the same year, it was just tough – you lost your holidays.

All that may have changed following a recent judgment (Shah v First West Yorkshire Ltd) where the judge added words to the Working Time Regulations to the effect that if a worker has been prevented by illness from taking a period of holiday leave within the relevant year, they must be given the opportunity of taking that holiday leave in the following year.

If your holiday year is coming to an end on 31st March, and you have employees who have not taken their full holiday entitlement under the Working Time Regulations because sickness has coincided with booked holiday, you may need to allow some carry over into the next leave year.