How better holiday planning can protect compliance, wellbeing and business continuity
Annual leave should give employees the opportunity to rest, recharge and return to work feeling refreshed. Yet holiday management can easily become a source of pressure for small businesses.
Some employees avoid taking time off because they feel too busy. Others save most of their allowance until the end of the holiday year. Managers may approve requests inconsistently, while business owners can suddenly find themselves trying to accommodate several people who all have significant amounts of leave left to take.
Since 6 April 2026, there is another important reason for employers to strengthen their approach. Businesses must now keep detailed records of annual leave and holiday pay for at least six years. These records should include holiday taken, leave carried over, holiday pay and payments made for untaken holiday when someone leaves the business.
Good holiday management is therefore no longer just about keeping the team calendar organised. It is an important part of legal compliance, employee wellbeing and effective workforce planning.
What changed in April 2026?
The new holiday record-keeping requirements mean employers need to be able to demonstrate that annual leave and holiday pay have been managed correctly.
It is not enough to rely on old emails, paper forms or individual managers’ calendars. Records need to show what leave employees were entitled to, what they took, what was carried forward and how their holiday pay was calculated.
Employers can choose how they keep these records, but the system must contain all the legally required information and be managed in line with UK data protection requirements. A spreadsheet may technically be acceptable, but as a team grows, maintaining a complete and reliable audit trail can become increasingly difficult.
The changes make it particularly important to have one consistent process for requesting, approving, recording and reviewing leave across the business.
Do not wait until the end of the holiday year
One of the most common annual leave problems is allowing employees to build up large balances without addressing them early enough.
By the time the final few months of the holiday year arrive, several employees may all need to take leave at once. This can create staffing difficulties, affect customer service and place additional pressure on colleagues who remain at work.
Employers should review holiday balances throughout the year rather than treating them as a year-end issue. Managers can discuss annual leave during regular one-to-ones and encourage employees to book breaks at sensible intervals.
A mid-year review is particularly helpful. It gives managers time to identify employees who have taken very little leave and have a supportive conversation before the situation becomes urgent.
This should not be approached as an administrative telling-off. An employee who repeatedly avoids taking leave may feel indispensable, be struggling with their workload or believe that taking time away will be viewed negatively. These are useful signals about workload, management expectations and workplace culture.
Employers must actively encourage people to take their leave
Employers have a legal responsibility to make sure workers have a genuine opportunity to take their statutory holiday entitlement.
This means more than simply making a booking form available. Employers should encourage people to take their leave and clearly explain that untaken holiday may be lost at the end of the leave year, subject to any legal or contractual carry-over rights.
Where an employer has not allowed or encouraged an employee to take their holiday, or has failed to warn them that untaken leave will be lost, the employee may be entitled to carry over up to four weeks of statutory leave.
Regular reminders, visible holiday balances and conversations during one-to-ones can all help demonstrate that the business has taken reasonable steps to encourage leave.
Managers also need to model healthy behaviour. If senior people rarely take time off, cancel holidays or continue responding to messages while away, employees may conclude that leave is available in theory but discouraged in practice.
Why taking annual leave is good for the business
Encouraging employees to take their holidays is not simply about meeting a legal obligation.
Regular breaks can support wellbeing, improve working relationships and reduce the risk of employees reaching exhaustion. ACAS also identifies potential benefits including improved productivity, reduced unplanned sickness absence and stronger staff retention.
Planned leave is usually much easier for a business to manage than stress-related absence, burnout or an unexpected resignation.
Holiday also creates an opportunity to test how resilient your business processes are. When one person is away, can colleagues access the information they need? Are responsibilities shared appropriately? Is the business too dependent on one individual?
If someone feels they cannot take a week away without everything falling apart, the underlying problem may not be the holiday request. It may be a lack of delegation, inadequate handovers or insufficient workforce planning.
What are the rules on carrying holiday over?
The starting point is that employees should normally take their statutory holiday during the relevant holiday year.
A contract, collective agreement or workforce agreement may allow some leave to be carried over. Where employees receive more than the statutory minimum of 5.6 weeks, the contract should explain whether any of that additional entitlement can be carried forward and under what conditions.
There are also circumstances where carry-over is legally required.
An employee who cannot take their holiday because they are on statutory leave, such as maternity leave, must be allowed to carry it into the following holiday year.
Someone on long-term sick leave may carry over up to four weeks of statutory holiday. This must usually be taken within 18 months from the end of the holiday year in which it accrued.
Employees may also be able to carry over up to four weeks where the employer did not allow or encourage them to take their leave or failed to make it clear that they could lose untaken entitlement.
Employers should therefore avoid assuming that a “use it or lose it” clause automatically removes all unused holiday. The circumstances behind the untaken leave must always be considered.
Can an employer require someone to take holiday?
Employers can generally require employees to take annual leave at a particular time, provided they give the appropriate notice and comply with the employment contract and holiday policy.
This can sometimes be necessary where an employee has built up a large balance or where the business closes during a particular period.
However, requiring leave should not replace sensible planning. The better approach is to communicate expectations early, monitor balances regularly and give people a reasonable opportunity to choose when they take their time off.
A clear holiday policy should explain the booking process, notice requirements, how competing requests will be managed, whether bank holidays form part of the allowance and what happens to untaken leave at the end of the year.
Can an employer require someone to take holiday?
Employers can generally require employees to take annual leave at a particular time, provided they give the appropriate notice and comply with the employment contract and holiday policy.
This can sometimes be necessary where an employee has built up a large balance or where the business closes during a particular period.
However, requiring leave should not replace sensible planning. The better approach is to communicate expectations early, monitor balances regularly and give people a reasonable opportunity to choose when they take their time off.
A clear holiday policy should explain the booking process, notice requirements, how competing requests will be managed, whether bank holidays form part of the allowance and what happens to untaken leave at the end of the year.
Making fair decisions about holiday requests
There will inevitably be occasions when several employees request the same dates.
Businesses can decline a holiday request where there is a genuine operational reason, but decisions should be made fairly and consistently. Managers should avoid repeatedly favouring the same people or assuming that one employee’s reason for requesting leave is more important than another’s.
A transparent process helps employees understand how decisions are made. For example, the business might normally consider requests in the order they are received while retaining discretion to consider minimum staffing levels, critical work and previously approved leave.
When a request cannot be approved, the manager should respond promptly, explain the business reason and discuss alternative dates. Leaving requests unanswered can make it harder for employees to plan and may contribute to a large amount of untaken leave later in the year.
How Breathe can simplify holiday management
Managing leave through emails, paper forms and separate spreadsheets can become difficult remarkably quickly.
As a Breathe Certified Partner, Haus of HR helps small businesses introduce a clearer and more consistent way to manage employee holidays.
Through Breathe, employees can submit their own leave requests and see their remaining allowance. Managers can review requests alongside a shared team calendar, helping them spot clashes and assess whether there will be sufficient cover.
Holiday records, approvals and balances are stored in one secure place, creating a clearer audit trail. Reports can also help managers identify who has taken very little leave, which teams are building up high balances and where action may be needed before the end of the holiday year.
Breathe can also support part-time and pro-rata holiday arrangements, bank holidays and agreed carry-over rules. Having this information visible to both managers and employees reduces queries, prevents lost forms and makes it easier to manage leave consistently.
The system does not replace good management, but it gives managers the information they need to make timely and fair decisions.
A practical annual leave routine for employers
Effective holiday management should happen throughout the year.
At the beginning of the holiday year, remind employees of their entitlement, the booking process and any rules about carry-over. Managers should review balances at regular intervals and raise holiday planning during one-to-ones.
A formal mid-year check can identify anyone who has not taken a reasonable proportion of their leave. Further reminders should be issued well before the end of the year, giving employees enough time to submit requests and managers enough time to plan cover.
All decisions, changes and carry-over arrangements should be accurately recorded.
This creates a healthier culture around rest while helping the business avoid a rush of requests, operational disruption and disputes over unused entitlement.
Manage holiday with greater confidence
Getting annual leave right benefits everyone.
Employees are more likely to take proper breaks, managers have better visibility of team availability and the business has the records it needs to demonstrate compliance with the rules introduced in April 2026.
Haus of HR can help you review your holiday policy, check your entitlement and carry-over arrangements, support managers with difficult leave decisions and implement Breathe effectively across your business.
As a Breathe Certified Partner, we can also offer your business a free one-month trial, giving you the opportunity to explore how the system can simplify holiday requests, approvals, records and wider HR administration.
Get in touch with Haus of HR to arrange your free Breathe trial and make managing annual leave one less thing to worry about.
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