If your leave year runs January to December, untaken holiday can be lost at the end of the year - but only if you gave staff a reasonable chance to take it, encouraged them to and told them they'd lose it. Some of it can be carried over if you agree. You can't pay people instead of them taking it unless they're leaving. And you can still say no to clashing requests in December, as long as you're not leaving them no way to use it.
We've been caught out by this. Nobody looked at holiday balances until December, then someone realised they had a pile of days left before the year ended and asked for most of the second half of December. We were stuck - say no and they lose it, say yes and we're short. Completely avoidable if anyone had looked in October. Or better, in the summer.
Can staff lose holiday they haven't used by the end of December?
Yes, the "use it or lose it" rule is real - but it comes with strings. If someone hasn't used their holiday by the end of the leave year, they can lose it, as long as you've given them a reasonable opportunity to take it, encouraged them to and told them clearly that it'll go if they don't.
If you haven't done those things, they can carry it over. Which means "nobody mentioned it" is a bigger risk for you than for them. A line in your Christmas email in October - "you've got until 31 December to use this year's holiday, after that it's gone" - plus a nudge to anyone with a lot left goes a long way.
You can also agree to let people carry some over. The extra 1.6 weeks of statutory holiday (that's 8 days for someone working five days a week) can be carried into next year if you both agree, and anything you give on top of the legal minimum is entirely down to your own rules. We've gone into the detail in annual leave carry forward rules.
Book Time Off shows everyone's days used and days remaining at a glance, so you can see who's sitting on a pile of holiday long before December. You can set a company-wide carry-forward limit, and an optional use-by date - carried days not used within 1 to 12 months of the new year are dropped automatically and the loss is recorded. It won't make people book holiday, sadly. But it means nobody's surprised.
→ Start free trialCan I say no when everyone wants the last two weeks off?
Yes. Having holiday left doesn't give anyone the right to take it on the dates they want. If four people with unused days all want 21 to 31 December and you can only spare two, you can say no to the others - with the right notice, which is at least as long as the holiday they asked for.
What you can't do is say no in a way that leaves them no chance at all to use it before the year ends, and then let it disappear. That's where it gets risky. So if you're saying no to the dates they wanted, offer them other dates - early December, or let them carry some over. We've covered saying no properly in can I refuse a Christmas holiday request?
You can also go the other way and tell people with lots left to take some of it, on dates you pick, as long as you give twice as much notice as the time off. That's often the cleanest fix in November.
Can I pay staff for holiday they haven't taken?
Not for their statutory holiday, no - not while they still work for you. The whole point of the legal minimum is that people actually take a break, so you can't just buy it off them. The only time you pay for untaken holiday is when someone leaves.
Anything you give on top of the legal minimum (say, if you give 30 days) is different - you can pay that extra off if your contract allows it. But for most small businesses the honest answer is: get them to take it.
What if they couldn't take it because they were off sick?
Then they don't lose it. Someone who couldn't take their holiday because they were off sick, or on maternity or other family leave, can carry it over. For long-term sickness that's up to four weeks, to be used within 18 months of the end of the leave year. For maternity and family leave it can be the full amount.
So before you write off anyone's days in January, check whether they've had a long stretch off during the year.
How to stop the December rush next year
This is what's worked for us:
- Look at everyone's balance at the end of June. Anyone who's used less than about a third gets a friendly nudge.
- Look again in October, when you send the Christmas email, and tell anyone with lots left that December's going to be busy.
- Say in writing - in the October email - that holiday not taken by 31 December is lost (apart from whatever carry-over you allow).
- Decide your carry-over rule and stick to it. "Up to 5 days, used by the end of March" is a common one.
If you'd like the carry-over rule written down properly, our carry forward policy template has wording and a Word download. And the rest of the Christmas plan is in how to manage Christmas holiday requests.
The legal bit, if you need it
You don't need this to get Christmas sorted, but here's what the rules actually say if anyone asks.
- Workers get 5.6 weeks' statutory holiday a year (28 days for someone working five days a week) (GOV.UK).
- Untaken holiday can carry over if the employer didn't give a reasonable opportunity to take it, didn't encourage it or didn't tell the worker it would be lost (GOV.UK).
- Up to 1.6 weeks can be carried over by agreement (GOV.UK).
- Long-term sickness: up to 4 weeks can be carried over, to be used within 18 months. Maternity and family leave: untaken leave must be allowed to carry over (ACAS, ACAS).
- No payment in lieu of statutory holiday except when someone leaves (GOV.UK).
- You can refuse or require holiday with notice: at least the length of the leave to refuse it, twice the length to require it (ACAS).
Sources
| GOV.UK | Holiday entitlement · 5.6 weeks, carry-over and payment in lieu. Checked October 2026. |
| GOV.UK | Holiday pay and entitlement reforms from 1 January 2024 · When untaken leave carries forward. Checked October 2026. |
| ACAS | Sick pay and holiday pay · Carrying over holiday after long-term sickness. Checked October 2026. |
| ACAS | Holiday and maternity leave · Carrying over leave after maternity leave. Checked October 2026. |
| ACAS | Asking for and taking holiday · Notice to refuse or require holiday. Checked October 2026. |
FAQs
This is practical, general information for UK employers. If you've got a dispute brewing or something unusual in a contract, talk to ACAS (it's free) or an employment solicitor.