One of the most common annual leave queries which arises is whether an employer can cancel an employee’s approved annual leave. Cancelling an employee’s approved annual leave could result in constructive dismissal claims, so employers are advised to tread carefully.

Can it be done?

Yes — dependent on notice given.

What is the notice period?

Regulation 15 of the Working Time Regulations 1998 (the regulations) stipulates that an employer can cancel leave by giving at least as many days’ notice as the amount of leave due to be taken. The notice period is the same if the employer chooses to offer substitute days to the employee.

For example, if an employee has booked a week off work, the employer must inform them their annual leave is cancelled with a week’s notice. Employers will also need to provide a legitimate business reason for cancelling the holiday. The reason for this is that an employee cannot claim constructive dismissal if there is a genuine reason behind the cancellation.

What are the restrictions?

Employers should bear in mind that they should not cancel any employee holiday, if it means the employee cannot take their full statutory leave entitlement.

Cancelling annual leave will undoubtedly impact employee morale and engagement, which is why it is advisable that cancelling holiday should be a last resort after all other options have been considered. If necessary, some employers may consider compensation for the employee for the inconvenience.

Summary

In order to avoid doubt or error, employers should ensure that the rules around annual leave are explicit in employees’ contracts or handbooks. These documents should specify each employee’s annual leave entitlement and should detail the method of requesting annual leave. These documents should also specify exactly how much notice the employee needs to provide and how much notice employers will provide to cancel it.

If an employee is on their notice period, it is not uncommon for an employee to want to use the remainder of their annual leave entitlement while working their notice period. Employers can consider whether a request for annual leave during the notice period fits with the needs of the business, and refuse if necessary.

Employees are entitled to pay in lieu of any untaken holiday however, so employers should bear that in mind when making a decision. In most cases, it is usually more cost effective to allow them to take annual leave than not.

Comment by BrightHR CEO Alan Price

Employees often place a great deal of importance on their annual leave and employers should really bear this in mind before deciding to cancel any pre-approved time-off. To avoid this inconvenience, HR personnel and line managers should work in unison to refrain from “double-booking” time off for members of the same team, especially in organisations with limited resources.

If cancelling pre-approved leave is the only viable option then employers will need to handle this in a professional and considerate manner, informing the employee well in advance. This will also present employers with a chance to earmark an alternative period that the employee could take off instead, which will be especially important if individuals still have a considerable number of days’ holiday to take towards the end of the leave year. 

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Last reviewed 9 October 2019