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Annual leave policy

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Our Annual Leave Policy template simplifies time-off requests, ensures fair allocation, and fosters a well-rested workforce for better productivity.

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How long to understand and implement this policy?
10 mins
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What is an Annual leave policy?

An annual leave policy is a set of guidelines and procedures that an employer has in place to manage employee annual leave entitlements. The policy outlines how employees should request and book time off, how much annual leave they are entitled to, and any rules or restrictions that apply to taking annual leave. It will provide a consistent and fair approach to managing annual leave entitlements across the organisation. 

The annual leave policy may include details on how leave is calculated, how it is accrued, and how it affects an employee's pay and benefits. It may also include rules around how much notice an employee needs to give when requesting annual leave, and how many employees can take leave at the same time.

By having a clear policy in place, employers can manage staffing levels, plan for any necessary cover or arrangements during an employee's absence, and ensure compliance with legal requirements.

Best practice timescale for this to be issued
When should this policy be issued?
During onboarding / after changes / planned refresher
Issued by who, to whom
Who should issue this policy, and to whom?
Internally issued to appropriate recipients in your Company
Applicable legal jurisdictions
In which jurisdictions can this policy be used?
Great Britain & NI (United Kingdom), Worldwide

What legislation and best practice guidelines have been taken into account in the development of this template?

United Kingdom
  • Employment Rights Act 1996: Provides the framework for annual leave entitlements, including minimum leave requirements.

  • Working Time Regulations 1998: Sets out rules on working hours, rest breaks, and annual leave entitlements.

  • Equality Act 2010: Ensures equal treatment and prohibits discrimination in annual leave allocation.

  • Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000: Ensures part-time workers receive pro-rata annual leave entitlements.

  • Maternity and Parental Leave Regulations: Outlines annual leave rights during maternity, paternity, and adoption leave.

  • Shared Parental Leave and Pay Regulations: Governs annual leave during shared parental leave arrangements.

  • Minimum Wage Regulations: Ensures employees receive proper pay during annual leave.

  • Employment Contracts and Collective Agreements: Contracts may specify additional terms related to annual leave entitlements.

  • Company Holiday Policy: Additional provisions specific to the company's annual leave practices.

  • Statutory Sick Pay (SSP) Regulations: Addresses the relationship between annual leave and sick leave.

Other territories

Consult your jurisdiction's employment legislation or labor laws to ensure compliance with the template. Review the language for local precision.

Annual leave Policy


The purpose of this policy is to set out the rules and procedures for taking Annual Leave.


This policy is applicable to all employees of [Company].

General principles

Your paid annual leave entitlement is set out in your [Contract of Employment | Statement of Terms and Conditions of Employment].

[[insert number] days of your annual holiday entitlement must be taken, e.g. during the off-peak summer months/at Christmas, when the Company operates a shutdown. The Company will give you notice of the exact dates you are required to take as annual leave as early as possible after the start of the holiday year and in any event at least one month in advance of the shutdown.]

No more than two weeks paid annual leave may be taken at any one time without the prior written agreement of your line manager.

In your first and last year of employment, your holiday entitlement will be that proportion of your annual holiday entitlement equivalent to the proportion of the holiday year in question during which you have been employed. This will be calculated to the nearest half day and assuming that holiday entitlement accrues at an even rate from day to day. During your first year of service, unless otherwise agreed in writing by your line manager, you will not normally be permitted to take more annual leave than you have actually accrued at the time the holiday is taken. Entitlement during your first year of service is calculated monthly in advance at the rate of one-twelfth of the full year's entitlement.

Holiday year

The Company's holiday year runs from [insert date] to [insert date]. You must use all of your holiday entitlement by the last day of each holiday year and, unless there are exceptional circumstances and unless approved in writing in advance by your line manager, you may not carry your holiday entitlement forward into the next holiday year. Holiday entitlement not used by the correct date will usually be lost and under no circumstances will payment in lieu be made for holiday entitlement that is lost through not being exercised by the correct date.


Your line manager must approve all requests for annual leave in writing in advance. You must not book holidays until your request has been formally authorised. You should endeavour to give as much notice as possible of proposed annual leave dates. In any event, such notice must be at least twice the number of days leave as that you wish to take as annual leave. The Company will try to co-operate with your holiday plans where possible, but this is always subject to the requirements of the Company's business and to adequate staffing levels being maintained at all times.

Sick absence during annual leave

Should you be incapacitated for work due to sickness or injury during any period of pre-booked annual leave (whether in whole or in part) the Company may in its absolute discretion reimburse the period of annual leave entitlement lost due to incapacity. You have no contractual right to reimbursement and, before considering whether reimbursement is appropriate in the circumstances, you must deliver to the Company a relevant medical certificate covering the period of incapacity. Reimbursement will only be considered where you fell seriously ill or you sustained a serious injury.

Termination of employment

On the termination of your employment, you are entitled to be paid for any accrued annual leave for that holiday year that has not been taken by the date of termination.

If, on the date of termination of your employment, you have taken more annual leave than you have accrued in that holiday year, you will be required to reimburse the Company in respect of such unearned annual leave. The Company shall be entitled to deduct the value of the unearned annual leave from any final payment of salary to be made to you. Holiday pay will be at a rate derived from annual salary accruing at [insert number] days per month.

No payment in lieu of accrued contractual annual leave will be made to you in the event of the termination of your employment for gross misconduct or in the event that you give inadequate notice to terminate your employment or you leave before your contractual notice period has expired. In addition, contractual annual leave will not accrue during a period of additional maternity leave or during a period of sickness absence, except at the absolute discretion of the Company. For these purposes, contractual annual leave means any leave entitlement provided for in your contract of employment that is over and above the statutory annual leave entitlement provided for in the Working Time Regulations 1998.

This policy [does not] form[s] part of your terms and conditions of employment.

Version: [1.0]

Issue date: [date]

Author: [name, job title]

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Annual leave policy
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