First published on Tuesday, February 4, 2025
Last updated on Tuesday, February 4, 2025
When an employee begins working their notice period, they may look to take some time off from work to create a gap between finishing their current role and taking their next steps. Be it a new job, travelling or studying.
However, there is no guarantee that this will be possible. It will all depend on their holiday entitlement and at what time in the holiday year they are leaving the company.
Often creating confusion for both employers and employees, in this guide we delve into the topic of annual leave and notice periods.
How much holiday have they accrued?
To get this right, you need to calculate how much annual leave allowance the employee has remaining. This will require considering two factors:
Their
annual leave entitlement
How many months/days you are into the holiday year.
For example, if your employee hands their resignation letter in during the month of July leaving employment on the 31st July, and your holiday year runs from January 1st to December 31st, you are only 7 months into the year. Based on the holiday accrual system, the employee will have only accrued 7/12 of their paid leave days.
Assuming they are a full-time employee on regular hours with an entitlement of 28 days, they will therefore be entitled to 16.3 days. It’s important to note you can not round down holiday entitlement.
A simple formula for this is:
(A x B) - C
A is the total number of days’ holiday the employee is entitled to in a year
B is the amount of the year that has passed
C is the amount of holiday already taken this year
Your employee may have already taken some time off during this holiday year, in which case, they will be entitled to whatever they have remaining from this total.
To understand how bank holidays play a part in this, read our employer’s guide to UK bank holidays.
What happens if they have used more holiday than they are entitled to?
If the employee has used more than their allowance in the period between the start of the holiday year and their notice period, you may be entitled to take a wage deduction. if you wish to do so, this must be explained in writing within your employment contracts beforehand, and discussed with the employee when they resign.
Paying for untaken statutory leave (‘payment in lieu’)
When an employee has paid leave remaining but does not take annual leave before they leave the company, you must pay what is known as ‘payment in lieu of holiday’. This is a payment that replaces an employee’s untaken statutory leave.
It must be understood that, according to the Working Time Regulations 1998, the end of employment is the only time when payment in lieu of holiday should be made. So other employees shouldn’t expect this for simply saving their holiday and not taking it before the end of the year.
Can an employer make an employee take leave?
In this case, some employers would prefer that their resigning employees use the remainder of their holiday allowance.
While you can encourage your employees to take their annual leave allowance during their notice period, you must give them advanced notice if you want to force it. Providing the notice within twice as many days as is required to be taken.
So, for example, if you want the employee to take 5 days annual leave during their notice period, you should make this instruction at least 10 days before.
Get HR advice from BrightHR for all your notice period queries
If you’re struggling to get to grips with the laws and regulations surrounding annual leave and notice periods – don’t panic! Our expert HR advice line is available 24/7 for access to legal advice and HR support when you need it. If you have any questions in regard to an employee resigning and their request to take annual leave, simply get in touch with our team.
Plus, with our HR software, the staff holiday planner can support you with automatic annual leave calculations to take the headache out of your leave management processes. Book your free demo today to see it in action.
