Managing employees’ annual leave can be a sensitive issue. Ryanair recently experienced this first hand, announcing that it would be cancelling thousands of flights because of changes to its holiday year, which had led to an influx of holiday requests from employees. The company openly admitted the situation was a “mess-up”, much to the dismay of hundreds of thousands of passengers who had their flights cancelled at short notice.
With adequate planning, as well as clear policies and procedures, employers can ensure their employees take annual leave at different times, thus avoiding any detrimental impact on their business.
The starting point is your contract of employment
Your contract of employment and employee handbook should set the foundations for how you will manage annual leave. Essentially, it will help manage employees’ expectations from the outset. A well-drafted contract of employment may contain the following provisions relating to the taking of annual leave, as appropriate:
- The amount of annual leave and whether this includes or excludes public holidays
- Whether employees may be required to work on public holidays and, if so, whether they are entitled to paid time off in lieu
- The maximum amount of annual leave that may be taken in one go. Many employers will cap this at two weeks.
- To whom the employee must make a request for annual leave
- Confirmation that annual leave may only be taken at such times as agreed by the employer
- A statement that there is no entitlement to carry over annual leave; employees must “use it or lose it”. Many employers allow a grace period for the carry-over of a fixed number of days of holiday entitlement. In an ideal scenario, employees should be required to take all their annual leave in the relevant holiday year. This helps ensure the employee is well-rested and there is no unfortunate and expensive build-up of annual leave for the employer. Be aware that employees may be entitled to take their annual leave in a subsequent holiday year (e.g. if an employee is on long-term sick leave).
- That payment in lieu of holiday is only payable on termination of employment
- That annual leave is deemed taken during any period of garden leave, or may be required to be taken during the employee’s notice period
Employers are not obliged to accept a request for annual leave, particularly if it would cause them an inconvenience. However, they should act fairly to avoid breaching trust and confidence between themselves and employees, in order to avoid claims for constructive dismissal.
It’s also worth being aware of the different rules that apply to requests for statutory time off, which can be taken for such things as antenatal appointments, maternity, paternity or shared parental leave. In these cases, the employee may have a statutory right to time off.
Anticipate competing requests to avoid conflict
Christmas, Easter, May half-term and the summer holidays tend to be the busiest times of year for annual leave, so be prepared for this and try to be pro-active where possible. If you have minimum staffing requirements, this needs to be communicated to your employees well in advance. For example, if you need one manager on duty at all times, it's important that all of your managers are aware of this.
One employer I dealt with would send an email to employees in September or October informing them of minimum staffing requirements over the Christmas holidays. This helped manage employee expectations and encouraged the employees to communicate with each other regarding their plans.
It is also good industrial relations practice to be fair to employees when determining who should get priority on annual leave at peak times. Often parents will claim they should have priority on school holidays. Some employees may therefore seek to put in their annual leave requests for peak time holidays at the start of the holiday year on the basis they hope to be “first-come first-served”. In such cases, it may be prudent to invite other employees to put in their requests early or face rejection later. Or to refuse to grant so much annual leave in advance.
By managing employees’ expectations in advance, they are less likely to have cause to be irritated if their annual leave application is rejected.
Your contract of employment and employee handbook should set the foundations for how you will manage annual leave. Essentially, it will help manage employees’ expectations from the outset.
Dealing with a later competing request
Employers commonly face requests for annual leave for periods when other employees are already due to be absent. Granting the later request in this situation may leave the employer short-staffed.
If the employer is able to accommodate the competing request for annual leave, it may do so, but if it can’t, it’s within its rights to reject the request that was submitted later. This can lead to employee discontent, which is why it is advisable to be clear about minimum staffing levels so that the rejection is anticipated rather than a surprise.
Some employers may be tempted to establish the reason for their employees’ annual leave requests, potentially to determine which request is more “worthy”. However, this is subjective and may breach trust and confidence with the employee whose application for annual leave has already been granted.
It may be less risky for an employer to simply reject the competing holiday request on the basis that another employee has already had their annual leave request approved. In an effort to be conciliatory, the employer could offer the employee with the rejected application first refusal on annual leave at a later date, while reminding them of the benefits of submitting an early request.
The one that won’t go away
Employees who do not take annual leave are problematic for employers. Sometimes this can arise where the employee is overworked and simply unable to take annual leave. It can also be that the employee does not manage their time effectively. On many occasions I have found that this problem arises with those who work from home and so do not take annual leave to attend to personal appointments, as an employee would if based in the office.
If an employee is building up too much annual leave, it could mean they’re not well-rested and performing to the best of their ability. It can also mean they become too expensive to dismiss, because of the value of their accrued holiday entitlement.
Employers in this situation should first ensure their contract of employment is adequately drafted and deals with whether annual leave may be carried over. If the employee is nearing the end of the holiday year and has accumulated an excessive amount of holiday, the employee’s line manager may first wish to sit down with the employee to establish the cause of the issue and emphasize the employer’s contractual rights on carry-over. This may involve explaining to the employee that they must use their holiday or lose it, or agreeing a plan of time off.
Staff holiday can cause headaches for employers, but it doesn't need to. Like other sensitive employment issues, a well-written contract and clear communication are good starting points to managing annual leave both fairly and effectively.
About the author
Michelle Last is a consultant solicitor at Keystone Law, specializing in employment law. She is a regular contributor to the press and has been published in The Times, The Financial Times, The Sunday Times, HR Director and Personnel Today, among other titles. Last is frequently ranked as the “most viewed” employment law solicitor and regarded as a “thought leader” on LinkedIn.