Carryover
Carryover is the practice of allowing employees to transfer unused annual leave from one leave year into the next, often with limits on the amount.
processes
Category
intermediate
Difficulty
5 min read
Read time
2025-01-15
Updated
Definition
Short definition
Carryover is the practice of allowing employees to transfer unused annual leave from one leave year into the next, often with limits on the amount.
Detailed explanation
Leave carryover allows employees to carry forward unused holiday entitlement into the following leave year. This provides flexibility while managing business needs and leave liability.
In the UK, the 4 weeks of leave from the Working Time Directive (20 days full-time) generally cannot be carried over unless the worker could not take it (e.g., on sick leave). The additional 1.6 weeks (8 days) can be carried over per employer policy.
Many employers allow limited carryover (e.g., 5 days) with a deadline to use it (e.g., by March 31). Some operate use-it-or-lose-it policies for amounts above statutory carryover requirements.
Practical guidance
How it works
At leave year end, system calculates unused leave. Carryover amount is added to next years balance (up to policy limit). Excess may be forfeited or paid.
Best practices
Set reasonable carryover limits
Communicate deadlines clearly
Track carryover separately
Remind employees before year end
Distinguish statutory vs contractual leave
Legal context
Legal basis
Working Time Regulations 1998; Case law (Plumb v Duncan Print Group)
Jurisdiction: United Kingdom
Key provisions
4 weeks WTD leave normally cannot be carried over
Additional 1.6 weeks can be carried over if policy allows
Sickness exception allows carryover of statutory leave
Maternity/family leave allows carryover
Employer can set additional carryover limits
Official source
Frequently asked questions
Can I lose my unused holiday?
The 4 weeks statutory WTD leave generally cannot be forfeited unless you genuinely chose not to take it and were able to. Additional contractual leave above 28 days can be lost if policy states use-it-or-lose-it.
Is there a time limit on using carried-over leave?
Company policy typically sets a deadline (e.g., by end of March). For sick-leave carryover, there may be an 18-month limit from the year it accrued.
Related glossary terms
Annual Leave
Annual leave is paid time off from work that employees are entitled to take each year for rest, relaxation, and personal activities.
Accrual
Accrual is the process by which employees earn leave entitlement incrementally over time, rather than receiving their full allocation at the start of the year.