How much annual leave are employees entitled to?

CIPD HR-inform. Croner

Stacie Cheadle, technical writer at Croner, looks at some of the issues employers need to address to comply with annual leave rules and new record keeping requirements

All employees in the UK have the basic right to 5.6 weeks annual leave under the Working Time Regulations 1998 (WTR) – seems simple enough. However, there are various pitfalls for employers, and with the new Fair Work Agency (FWA) taking on state enforcement of holiday rights for the first time, now is the time to act and ensure compliance with the rules on annual leave.

Under new government proposals, for the first time, the right to holiday leave and pay will be backed by state enforcement when the Fair Work Agency becomes responsible for promoting compliance, investigating non-compliance and taking action where employers fail to meet their obligations on annual leave in 2027.

Already there are various new rules in force under the Employment Rights Act 2025 which employers need to ensure they are fulfilling.

Below, we look at potential risks for employers which can lead to breaches of the current law on annual leave.

1.           Not keeping annual leave records

From 6 April 2026, under the Employment Rights Act 2025 employers are required to keep records of employee annual leave and holiday pay for six years. The information must include records on:

•            Ordinary and additional annual leave.

•            Annual leave carried forward from previous years.

•            Details of holiday pay, including which pay elements have been included or excluded.

•            Any payments in lieu of annual leave, including for carried over leave.

Employers can keep these records in any way they reasonably consider appropriate.

Failure to maintain adequate records dating back to 6 April 2026 will be considered a criminal offence. This will be enforced by the FWA when it takes over in this area and could result in fines and additional penalties.

If records reveal that holiday pay has not been paid correctly, employers could be ordered to rectify underpayment and a penalty of 200% of the underpayment (capped at £20,000 per underpaid individual) could be imposed. This penalty can be reduced by 50% if paid within 14 days.

2.           Failing to remind employees to take annual leave year

The statutory minimum of 5.6 weeks makes up just under 11% of an employee’s total working time over the course of a year, so in theory there should be plenty of time to take all the leave accrued in that year. Under Regulation 13 of the Working Time Regulation, employers must:

a.           recognise a worker’s right to annual leave;

b.           give the worker a reasonable opportunity to take the leave they are entitled to or encourage them to do so; and

c.           inform the worker that any leave not taken by the end of the leave year, which cannot be carried forward, will be lost.

If an employer fails in the above, any annual leave accrued and not taken can be carried forward to the next annual leave year. This risks compounding the problem the next year. If the employer does not resolve the issue that led the annual leave to be carried over in the first place, this could continue again and again.

To comply with the law, it is good practice to remind staff periodically that they should be taking all their annual leave in the year it is accrued and, should they fail to do so, that entitlement will be lost at the end of the leave year.

This could be done via a quarterly reminder of the holiday policy, a notice on the holiday booking system, in team meetings, and/or through internal memos — whichever method suits the organisation the best.

Evidence of these actions should be kept, demonstrating the employer’s compliance with its obligations on annual leave.

Making sure the arrangements to book holidays are as straightforward as possible is also recommended. You could, for example, provide information on the days that annual leave can be booked and remind employees how to do this, encouraging them to do it in advance of their leave and avoid the disappointment of not getting the days they want.

Should there be any reasons that might make employees reluctant to take leave, such as staff shortages or excessive workloads, these should be discussed with individuals.

Action may need to be taken to ensure the employee feels able to take their annual leave, such as temporarily reassigning work or reviewing staffing levels in their department. Failure to do that could prevent the employee from having a reasonable opportunity to take their leave.

3.           Paying rolled up holiday pay incorrectly

Part-year and irregular hours workers (only) can have their holiday pay ‘rolled up’. When an employee is paid rolled-up holiday pay (RUHP), they get paid their holiday pay at the same time as they receive their regular wages — the payments are effectively ‘rolled’ together.

For an employee who has the statutory minimum holiday entitlement, they would get paid 12.07% of their wages for the pay reference period, paid on top of their pay for that period, to reflect their accrued holiday pay.

Then, because they have already been paid their holiday pay along with their regular pay, when the time comes for them to take annual leave, they do not need to be paid again.

Of course, paying holiday pay alone is not enough to meet the obligations under the rules. Time must also be taken away from work as annual leave and this means that those employers who pay RUHP to their staff must have systems in place that allow them to book and take annual leave throughout the year.

Failing to do this could lead to those employees being paid RUHP to argue they are not being given their annual leave entitlement, through employee grievances or even employment tribunal claims.

Takeaway

Annual leave is a fundamental employment right. It ensures employees take time to rest, be with their friends and family and take care of whatever tasks they have that cannot be done during working hours.

To protect it, the law puts the obligation on employers to recognise this right and ensure they have reasonable opportunity to take their leave by removing barriers within the employee’s job to them taking it. Ahead of the Fair Work Agency taking over enforcement of annual leave, employers should be checking their processes and ensuring they are compliant with the law.

By Stacie Cheadle, HR technical writer at Croner