A decision recently made by the European Court of Justice (ECJ) has implications on the UK workers right of carrying over the statutory holiday.

The ECJ had ruled that workers have the right to statutory holiday pay at the end of a carryover period or when their employment has been terminated in case the employer has not ‘specifically and transparently’ given the chance to the employee to take the leave.

What this means is that workers should be told formally through a company policy that they are entitled to take certain days of leave in a year, and that they will lose this right if they don’t avail the leave. In case of a dispute, the employer will have to prove that it has taken due diligence in informing the employee about the leave entitlement. The employee will lose the entitlement in case the worker does not take the leave despite knowing about the consequence.

The ECJ had stated that any law that is contrary to the decision needs to be revised or disapplied in favour of both private and public-sector workers. The Working Time Regulations 1998 regarding the carryover of four weeks’ EU derived statutory holiday will now need to be as per the proviso that the employer had taken due diligence in informing the worker about the leave entitlement.

How ECJ Decision Affects UK Employers

Since UK will not part from the EU until April 2019, all EU laws apply to the UK. Accordingly, employers need to create a holiday policy informing employees about the potential loss of holiday leave entitlement in case they don’t avail it during a particular period.

Employers should take care to especially inform part-time workers about the right to annual leave based on a specific number of hours worked.

While not necessary, employers also should consider issuing reminders within a reasonable time before the end of the year encouraging employees to take the leave. Not taking any action in this regard may make the employer liable to make holiday payments to employees who have not availed the right.

However, if the worker did not avail leave despite knowing about the consequences, the employer will not be liable to make holiday payment.

Any practice that may prevent a worker from taking annual leave may make the employer liable for holiday payments. This could result in grave financial difficulties, particularly for smaller businesses.