Stay ahead of the curve with our exclusive Q&A series, brought to you by leading law firm, A&L Goodbody, LLP, designed to answer your most pressing legal questions. These expert insights provide clear guidance to ensure your HR practices remain compliant and protect your organisation.  

I offer additional contractual leave to my employees as well as statutory leave. How does this affect carry over?

Statutory leave is the minimum leave entitlement of workers under the Organisation of Working Time Act 1997 (the “OWT Act”). It is currently a maximum of 4 working weeks (20 days) of annual leave per year for a full-time employee. Any additional leave provided to full-time employees is not statutory but is potentially contractual. In general, statutory rules and remedies only apply to the statutory leave allowance; disputes over additional/top‑up leave are determined as per the employment contract.  Under the OWT Act, the statutory leave must be granted to employees within the relevant leave year, or with the employee’s consent within 6 months of the relevant leave year ending. As the OWT Act does not explicitly deal with use it or lose it or carryover, it is best to include your intentions in an employee’s employment contract. 

I notice that some employees have not used their full allowance of 20 days, but year-end is approaching. Employees are not allowed to carry over leave. What should I do? 

If employees are not allowed to carry over leave into the following year, aka a “use-it-or-lose-it” policy, you must take proactive steps to encourage and facilitate employees to take their leave and warn them clearly and in good time that it will expire if unused. 

In this way, if an employee does not use their allowance, it will be after having an opportunity to, and in full knowledge of the consequences that they will lose it. Employees cannot be paid in lieu of statutory annual leave, unless the employment relationship ends.

How can I go about encouraging employees to use their leave? 

Employees should be encouraged to use their leave allowance throughout the year. You should send regular reminders during the leave year about annual leave balances, and the need to book time off. 
Sending targeted reminders in the months leading up to year‑end to employees with outstanding leave to take can help to clear up leftover leave. Instruct managers to follow-up, encouraging and facilitating time off with employees, and clearly state the “use-it-or-lose-it” consequences (loss of leave if unused by the deadline). Finally, you should document the process used to liaise with staff on annual leave balances, for good order.

It’s a busy time, and we are short-staffed. It could be disruptive if employees take leave now.  Is it so bad if employees don’t use their allowance?

If employees are not reminded or facilitated to take leave before it expires, and therefore do not receive their minimum statutory entitlements, there is a risk of statutory claims, under the OWT Act and the Payment of Wages Act.

I didn’t realise that some employees had unused statutory leave. Now the leave year has ended. Is there any way I can remedy this?

If you normally operate a use-it-or-lose-it policy, consider providing an immediate opportunity to take the missed statutory leave within a defined window. You should document the opportunity and facilitation of leave to employees. You can make it clear this corrects the past error and confirm entitlement going forward. Keep a close eye on the current calendar year, to prevent reoccurrence.

I would like to introduce a use-it-or-lose-it policy in my business. What would this look like? 

To be effective, a use it or lose it policy should be clearly communicated to employees, and address the following points:

• If such policy would be an amendment to a previous contractual entitlement to carry over leave, employee consent to the change may be required. 
   
• Implement a clear rule on carryover (whether that is capped or no carryover of days) and an explicit expiry date. 
   
• Focus on year‑round encouragement and facilitation to take leave, with scheduled reminders, manager follow‑ups, and system logging. 
   
• Clearly outline the consequences of non‑use, i.e. forfeiture of the leave.
   
• Consistently enforce the policy, and keep accurate records. 
   
• Consider including potential disciplinary steps for persistent non‑compliance with booking processes.
   

What should managers and HR do differently to stop accumulation of leave going forward? 

If you have previously had issues with accumulation of leave, now is the time to address this. Consider implementing a quarterly review of annual leave balances, and prompting employees to book across the year to avoid year‑end bottlenecks. 
Employers can also consider the use of automation to assist in managing the administrative burden, e.g. by sending automatic reminders to employees who have >5 days remaining by October.  Requiring employees to log all leave in a centralised system also reduces the burden on managers for keeping track of leave. However managers should still ensure that they are providing timely reminders and facilitation of leave.

Employees failed to log leave correctly, or take leave when encouraged. Can employees be disciplined for this? 

You may be able to take disciplinary action, if you have a clear policy in place on using annual leave which has been communicated to employees, and if employees were first encouraged to use their leave, and given reasonable opportunity to do so. The application of a policy on leave should be applied proportionately and consistently; the primary focus should be on reminders and facilitation. Great care should be taken however, as a third party (such as the WRC) may see the employee forfeiting their leave via use-it-or-lose-it as enough of a sanction.  Disciplinary action is easier to justify where an employee is deliberately under-recording leave for example or breaching policies on when leave should be taken.