Annual Leave Entitlements In The UK: What Employers Need To Know

If you’re running a small business, annual leave can feel deceptively simple - until you hire your first employee, build a rota, try to cover peak periods, or deal with a last-minute holiday request.

The good news is that UK annual leave rules are fairly well-established. The tricky part is applying them consistently (and fairly) across different working patterns, especially if you have part-time staff, shift workers, or casual arrangements.

This article is general information, not legal advice. If you’d like guidance on your specific situation, it’s worth getting tailored advice.

Below, we break down what you need to know about annual leave entitlements in the UK, how to calculate them, how to set rules for booking leave, and the common pitfalls that catch small businesses out.

What Is The Legal Minimum Annual Leave Entitlement In The UK?

In the UK, most workers are entitled to 5.6 weeks’ paid holiday per leave year (this is the statutory minimum). This comes from the Working Time Regulations 1998.

For a full-time employee who works 5 days per week, 5.6 weeks usually equals:

• 28 days of paid annual leave per year.

This entitlement can include bank holidays, but it doesn’t have to. This is a commercial decision (and a drafting decision) you make in the employment contract and/or staff handbook.

Can Bank Holidays Be Included In Annual Leave?

Yes. Many employers provide “28 days including bank holidays”. Others provide “28 days plus bank holidays”.

The key is clarity. If your contract says annual leave is “inclusive of bank holidays”, employees generally use some of their holiday entitlement to cover those days when your business closes (or when you want them to take leave).

If you’re unsure how to word it (or what it means in practice), it’s worth getting this nailed down in your documents - “inclusive” clauses are a common source of disputes. You may find it helpful to review wording like inclusive of bank holidays so you can set expectations properly from day one.

Do All Workers Get Annual Leave?

Most workers (not just employees) are entitled to statutory paid holiday. That means even if someone isn’t an “employee” in the traditional sense, they may still have holiday rights depending on their working status.

This is why it’s important to correctly document the relationship and working arrangements - especially for casual, variable-hours, and contractor-style engagements. A well-drafted Employment Contract helps set out leave, pay, and booking rules clearly.

How Do You Calculate Annual Leave For Part-Time, Shift, And Irregular Hours Staff?

Small businesses often get tripped up here because annual leave isn’t “one-size-fits-all”. The core rule is still 5.6 weeks - but the days or hours depend on how the person works.

Part-Time Staff

Part-time workers get the same 5.6 weeks, calculated pro-rata.

Example: an employee works 3 days per week.

• 5.6 weeks × 3 days = 16.8 days annual leave per year

You can express this as days or hours (many small businesses prefer hours for accuracy, especially with varied shift lengths).

Shift Workers

If your staff work rotating patterns (for example, 4-on/4-off or varying shift lengths), your policy should:

• explain whether leave is requested in days or hours
• confirm how a “day” is treated where shift lengths differ
• set out how leave interacts with weekends or non-working days

This is also where you want consistent rules about rest breaks and working time more generally. Holiday problems often show up alongside scheduling problems, so it can help to keep your approach aligned with the Working Time Regulations framework.

Casual And Irregular Hours Staff

For casual or irregular-hours staff, annual leave is often handled through accrual (building up holiday over time). The calculation method can be more technical here, particularly where someone has variable hours and variable pay.

It’s also an area that has changed in recent years. For example, reforms allow (in certain circumstances) a 12.07% accrual method for irregular-hours and part-year workers, and there are updated rules on holiday pay and how it can be paid (including the option of “rolled-up” holiday pay where legally permitted and correctly shown on payslips). Because the details can affect both compliance and cost, it’s sensible to get tailored advice before finalising your approach.

If you’re hiring casually or seasonally, it’s also worth double-checking your wider contract terms (notice periods, working patterns, etc.). For example, if you use flexible arrangements, you may also want clarity on zero hour contract notice expectations.

Can You Tell Employees When To Take Annual Leave?

Yes - in many cases, you can require employees to take annual leave at certain times (for example, during a Christmas shutdown or when the business closes for a refurbishment), as long as you follow the rules and your approach is reasonable.

Generally, you must give notice that is at least twice as long as the leave you want them to take (for example, 2 weeks’ notice to require 1 week of leave), unless your contract says something different.

In practice, small businesses often set out rules such as:

• peak periods where leave is restricted (e.g. December retail)
• block-out dates for key trading days
• a requirement to keep a minimum number of days in reserve for shutdown periods
• deadlines for booking leave (e.g. “summer leave must be requested by X date”)

Just keep in mind: even if you’re legally allowed to direct leave, you should still apply your policy consistently to avoid grievances and morale issues.

If you want to build a clear policy around business-led leave, it helps to understand the practical limits on dictating holidays and how to communicate those expectations in writing.

Can You Refuse An Annual Leave Request?

Yes, you can refuse a request - but you should do it properly.

As a general rule, you need to give notice of refusal at least the same length as the leave requested (for example, if an employee asks for 5 days off, give at least 5 days’ notice that it’s refused), unless your contract or policy says otherwise.

Good reasons to refuse (or request a change) often include:

• insufficient staffing levels
• clashes with other approved leave
• critical business deadlines
• peak season trading

What you want to avoid is refusing leave in a way that appears unfair, inconsistent, or discriminatory. This is especially important where the request relates to religious observance, disability-related needs, or family responsibilities.

It’s worth having a simple process set out in your documents - even a short “how to request leave” section in your staff handbook can prevent confusion. (If you’re dealing with repeated disputes, it may also be a sign your contracts need tightening.)

What Are The Common Annual Leave Issues Small Businesses Run Into?

Most annual leave disputes aren’t caused by the law itself - they’re caused by unclear policies, messy record-keeping, or inconsistent decisions made under pressure.

Here are some of the biggest “watch-outs” we see for small businesses.

1) Confusion Over Bank Holidays

Bank holidays are not automatically “extra” paid leave. They can be included in the 5.6 weeks’ statutory entitlement, depending on what you’ve agreed contractually.

Also, not every worker will normally work Mondays - so if you “give bank holidays off” without a pro-rata approach, part-time staff may end up treated less favourably (or more favourably) than others.

If a bank holiday falls on someone’s usual non-working day, that doesn’t automatically mean they get another day in lieu - it depends on your policy and contract wording. This is why it’s worth being clear about non-working days and bank holidays and what you want the rule to be in your business.

2) Not Keeping Proper Holiday Records

You don’t need a complex HR system, but you do need a reliable record of:

• holiday entitlement
• holiday taken
• holiday accrued (where relevant)
• holiday carried over (if applicable)

Without records, it’s hard to:

• prove you allowed staff to take annual leave
• calculate final pay correctly when someone leaves
• resolve disagreements quickly

3) Carry Over Rules And End-Of-Year Pile-Ups

Many businesses run into problems when employees “save up” annual leave and then try to take a big block near the end of the leave year.

You can manage this by:

• setting a clear leave year (e.g. calendar year or anniversary year)
• encouraging employees to take leave evenly across the year
• setting a cap on carry over (where permitted)
• planning early for peak periods

There are also situations where carry over must be allowed (and the rules can differ depending on the “type” of statutory leave involved). Common examples include where someone couldn’t take leave due to sickness, or where they were on statutory family leave, or where they were prevented from taking leave and weren’t given a reasonable opportunity to do so. Because this area can become technical quickly, it’s a good one to get advice on if it comes up often in your team.

4) Holiday During Sickness, Family Leave, Or Other Absence

Annual leave can overlap with sickness in complicated ways (for example, an employee may be able to reschedule holiday if they were sick during booked leave). Family leave can also affect accrual and carry over.

As a small business, the practical issue is usually cashflow and cover. The legal issue is making sure you apply the rules properly and don’t accidentally breach statutory entitlements.

If you’re regularly dealing with long absences or complex absence patterns, it may also be worth reviewing how you manage sickness overall - including what you do with fit notes and whether you need a clearer capability pathway (rather than trying to “solve” an absence issue with holiday rules).

How Should Annual Leave Be Written Into Your Employment Documents?

Your annual leave rules should not live only in someone’s inbox or a verbal “we usually do it like this” arrangement.

At minimum, you should document annual leave in:

• the employment contract (core entitlement and key rules)
• a staff handbook or workplace policy (how requests work in practice)
• an offer letter (if you use one, but make sure it aligns with the contract)

What Should Your Annual Leave Clause Cover?

A well-drafted annual leave clause usually includes:

• Entitlement: days/weeks/hours per leave year
• Leave year: when it starts and ends
• Bank holidays: included or additional
• Booking process: notice requirements, approval process, who approves
• Restrictions: peak periods, maximum consecutive leave, blackout dates
• Carry over: whether it’s allowed, how much, and by when it must be taken
• Termination: treatment of accrued but untaken leave on exit

Even if you have a small team, it’s worth getting this right early - it protects you from disputes and sets expectations clearly as you grow.

If you’re building out your HR foundation, it’s also useful to check that your onboarding process (including probation terms) aligns with your leave policy. For example, if you want leave restricted during early employment, make sure it’s consistent with your probation period wording and day-to-day practice.

A Practical Example: Why Clear Rules Matter

Imagine you run a café with 6 staff, and two team members request the same week off in August. If you don’t have a clear “first come, first served” rule (or a fair alternative), you’re stuck making an on-the-spot decision that can easily feel unfair.

Now imagine the same situation, but you’ve set out:

• a peak period rule for summer weekends
• a requirement to request leave 4 weeks in advance
• a cap on consecutive leave during busy periods

Even if someone is disappointed, you can point to a clear policy that applies to everyone. That alone can prevent a small operational issue becoming a long-running conflict.

Key Takeaways

• Annual leave in the UK is usually a statutory minimum of 5.6 weeks paid leave per year (28 days for someone working 5 days per week).
• Bank holidays can be included in holiday entitlement, but you need clear contract wording (and a fair approach for part-time staff).
• You can usually refuse leave requests or require employees to take annual leave at certain times, but you must follow notice rules and apply your approach consistently.
• Part-time, shift, and irregular-hours annual leave should be calculated carefully - consider using hours-based tracking for accuracy.
• Most disputes come from unclear policies and weak record-keeping, not the entitlement itself.
• Your employment documents should clearly cover entitlement, booking processes, carry over, bank holidays, and what happens to unused leave when someone leaves.

If you’d like help updating your contracts and policies so your annual leave wording matches how your business actually operates, you can reach us at 08081347754 or team@sprintlaw.co.uk.