The answer to this question is ‘it depends on what type of annual leave it is‘.
To explain, there are three different categories of annual leave:
- statutory annual leave originating in EU law which gives workers 4 weeks’ paid holiday and is subject to EU / Court of Justice of the European Union (CJEU) requirements;
- statutory annual leave originating in UK law which gives workers 1.6 weeks’ paid holiday and isn’t subject to EU / CJEU requirements (despite UK courts electing to follow them in certain circumstances); and
- contractual annual leave that an employer may choose to provide which gives workers additional paid holiday on top of statutory requirements and is subject to the employer’s terms and conditions.
Under normal circumstances, the first type of annual leave can’t be carried over to the next leave year, the second can if there’s written agreement between the employer and worker to that effect and the employer decides the terms of the third, including whether or not to allow carry-over. The upshot is therefore that:
- at least 4 weeks’ of a worker’s annual leave must usually be used during the leave year in which it arises and can’t be carried over; and
- an employer can agree to allow its workers to carry over the additional 1.6 weeks’ statutory annual leave and any further contractual leave, but isn’t required to do so.
The above references to ‘normal circumstances’ and ‘usually’ are used in the context of the 4 weeks’ statutory annual leave because they can be carried over if it wasn’t possible for the worker to take that leave on account of absence through sickness. Whilst not a specific requirement of any legislation, there have been numerous cases on the issue.
Indeed, the CJEU recently clarified the position that only the 4 weeks of annual leave provided for in the Working Time Directive must be carried over from one leave year to the next when a worker is prevented from taking their remaining entitlement as a result of sickness absence.
The case of TSN v Hyvinvointialan had been referred to the Court to consider, amongst other matters, whether national rules preventing the carryover of more than 4 weeks’ leave were permissible. In response to this question, the Grand Chamber held as follows:
‘In such a situation, the rights to paid annual leave thus granted beyond the minimum required by [the Working Time Directive] are governed not by that directive, but by national law, outside the regime established by that directive…In the light of the foregoing considerations, the answer is that [the Working Time Directive] must be interpreted as not precluding national rules or collective agreements which provide for the granting of days of paid annual leave which exceed the minimum period of 4 weeks…and yet exclude the carrying over of those days of leave on the grounds of illness.’
Cheryl Moolenschot, Litigation Consultant at EML, comments:
“The CJEU’s decision, therefore, confirms the decision in the UK case of Sood Enterprises Ltd v Healey that, in the absence of a contractual agreement, there is no right to carry over any more than the 4 weeks’ statutory leave under British law.”