Is holiday lost if it’s not taken?

“Is holiday lost if it’s not taken?” – Exposing the myths and finding the facts

It’s coming towards the end of your holiday year and one employee hasn’t applied to take all of their statutory annual leave entitlement.

Is holiday lost if it’s not taken? - staff at work

Is holiday lost if it’s not taken?

Will they lose that holiday if they don’t act before the end of this period?

Under the Working Time Directive (WTD) all workers are entitled to 20 days or four weeks holidays as a statutory minimum.

In the UK the WTD is enshrined into domestic law by the Working Time Regulations (WTR).

These Regulations grant all workers an additional 1.6 weeks (which equates to an extra eight days) holiday on top of their WTD minimum rights. The WTD and WTR holidays rights distinction is important.

In addition to the statutory minimum WTD and WTR holiday rights, an employer may grant an employee additional annual leave.

This isn’t governed by legislation it’s a matter for the parties and the employment contract.

If one of your employees hasn’t applied to take their entire annual holiday entitlement and it’s heading towards the end of your holiday year, will they forfeit their statutory holiday entitlement if they don’t take it?

Let’s get technical

In the case Max-Planck-Gesellschaft -v- Shimizu (2018) Mr Shimizu (S) worked at the Max Planck Institute (M) from 2011-2013.

During 2100 and 2012 S didn’t exercise his full rights to take statutory holiday. M had invited him to do so before the end of the relevant holiday year but didn’t force him.

Under German law S lost the right to carry his statutory holiday into the next leave year. On the termination of his employment, S claimed unpaid holiday pay.

The Court of Justice of the European Union (CJEU) held that a worker who doesn’t exercise their rights to paid annual leave under WTD should only lose their statutory leave entitlement if the employer has “diligently” told them that the leave will be lost if it’s not taken before the end of the holiday year. 

Importantly, this ruling only applies to the statutory minimum granted under the WTD.

The worker’s additional 1.6 weeks under the WTR can be forfeited. Equally, holiday in excess of these rights will be determined by the employment contract.

The only time this does not apply is where the employee has been unable to exercise their holiday rights due to long-term sickness absence, maternity leave, and other types of parental leave. Different rules apply in these situations.

The CJEU didn’t expressly define how employers can diligently inform employees of their rights.

Having a robust holiday policy and advising employees of the terms of the policy during their induction is advisable.

An annual reminder about the terms at start of the holiday year is also advisable.

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