One of the most common myths lingering around annual leave is that an employer cannot cancel an employee’s holiday once it’s been agreed.
It’s bound to happen at some point.
A key member of staff has requested a week off work. You’ve approved it. They’ve booked a safari—or a beach getaway—or they’re touring Europe. They’ve booked flights, packed their bags and exchanged currency.
And then, the work suddenly piles up.
A big project needs finishing by the end of the month
The realisation dawns on you that maybe you won’t be able to handle the workload without everyone on board.
What happens then?
You know you need your employee to stay and work, but you don’t want to risk the employee cancelling their flights, their hotel, and potentially losing money.
They could claim constructive dismissal in such circumstances.
Fortunately, there is an answer.
Cancelling annual leave
The rule is simple: give as much notice to the employee as the length of the holiday.
If an employee has booked a week off work, you must tell them their annual leave is cancelled with a week’s notice. A day’s notice for a day. A month’s notice for a month. And so on.
You should also have a legitimate business reason for cancelling the holiday.
Then, if an employee does claim constructive dismissal, you’ll be able to prove there was a genuine reason behind the cancellation.
Finally, you shouldn’t cancel any holiday if it means the employee won’t be able to take their full statutory leave entitlement.
If all these conditions are met, then legally you shouldn’t have any problem.
However, there could still be a significant impact on employee morale and engagement.
That’s why it’s worth noting that cancelling the holiday should be a last resort after all others options have been considered. You may even consider compensating the employee for any inconvenience.
Have rules in place
To leave no room for doubt or error, you should ensure the rules around annual leave are in employees’ contracts or handbooks.
This should set out exactly how much notice the employee needs to provide and how much notice you need to provide to cancel it.
It should also detail exactly how much annual leave the employee is entitled to and how they should go about booking it.
This serves as a reminder to employees of the rules and as proof, should you have to go to tribunal, that the rules on annual leave are clearly stated and available.
What if the employee is working their notice period?
It isn’t uncommon for employee to want to use what’s left of their annual leave entitlement whilst working their notice period.
You can consider whether a request for annual leave during the notice period fits with the needs of your business, and refuse if necessary.
Employees are entitled to pay in lieu of any untaken holiday however, so bear that in mind when making your decision. It’s usually more cost effective to allow them to take annual leave than not.
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