Carry-over rules: what happens to unused leave at year end

Every leave year ends the same way: some people have used every day, and some have a week left that they never got round to booking. What happens to those days is your carry-over rule. If you do not have one written down, you will be asked to invent one in the last fortnight of the year, one person at a time.

This guide sets out the choices, works through an example with real numbers and gives you a short year-end routine. Rules on unused leave differ between countries and contracts, and some places protect part of the allowance from being lost. Check the rules that apply to you before you choose.

Why carry-over needs a rule

• Fairness: without a rule, the outcome depends on who asks and which manager they ask.
• Cover: unlimited carry-over lets large balances build up, and they tend to be taken all at once.
• Cost: unused leave is pay the business owes. The bigger the balances, the bigger that figure.
• Rest: people who never take leave are not saving the business money. A rule that nudges them to book is doing them a favour.

The four choices

Some businesses pay out unused days instead of carrying them. Whether you may do that, and for which days, depends on local rules, so ask before you offer it.

A worked example

Two details in that example matter more than they look. First, the order: carried-over days were used before new ones. If it worked the other way round, Emma would have lost all 5 carried days in March while her February trip used up new leave. Second, the expiry date gave her a clear deadline. Without it, the 5 days would sit in her balance for the whole year and she would probably carry over again.

Choosing the limit and the expiry

The limit

A common approach is to let people carry over about one working week. It is enough to cover a trip planned for early in the new year, and small enough that cover is not a problem. If your allowance is small, a smaller limit keeps things in proportion.

The expiry

Three months into the new year is a popular choice because it is long enough to plan and short enough to remember. If the first quarter is your busiest time, pick a later date so people can actually use the days.

Exceptions

Decide in advance what happens when someone could not take leave for a reason outside their control, such as long illness, parental leave or a request the business turned down. Local rules often have something to say about these cases. A short sentence in your policy, such as 'a manager can approve extra carry-over in these situations', saves a lot of improvising.

A year-end routine

1. 1Three months before year end, list everyone with more unused days than the carry-over limit.
2. 2Tell each of them their balance, the limit and the date the year ends. Ask them to book.
3. 3Six weeks before year end, look at the who's-off picture for the final month and sort out clashes while there is still room to move dates.
4. 4Decide any exceptions now, in writing, with the reason.
5. 5On the first day of the new year, check a few balances by hand: unused days, minus anything over the limit, plus the new allowance.
6. 6A month before the expiry date, remind anyone who still has carried-over days.

Mistakes to avoid

• Announcing the rule in December. People cannot plan around a limit they hear about three weeks before it applies.
• Using new leave before carried-over leave, so the older days quietly expire.
• Applying the limit to part-time staff in full-time days. A limit of 5 days is a full week for some people and nearly two weeks for others; consider stating it as 'one of your working weeks'.
• Making exceptions by chat message. Record who approved what, or next year nobody will remember why one balance looks different.
• Forgetting leavers. Work out what happens to carried-over days when someone leaves before the expiry date, within the rules that apply to you.

How ClockinBee handles carry-over

Each time off policy in ClockinBee has its own carry-over settings: how many days can move into the next leave year, and when carried-over days expire. Because policies are set per time off type, annual leave can carry over while other types reset. You can also give one person a different policy, which is a tidy way to record an agreed exception.

Staff see their balance when they request time off, and the request preview shows the days a request uses and what would be left. Managers have balances for the whole team and a who's-off calendar, which makes the three-months-out check a five-minute job instead of an afternoon with a spreadsheet.

ClockinBee applies the limit and expiry you set. It does not know which rules apply in your country or contracts, so check those first and then set the policy to match.

Questions people ask