Unused annual leave can vanish without payment — the conditions that make the promotion scheme work

The basic rule — unused leave is paid out

Leave is meant to be taken within the year, and where it is not, it is settled as an allowance for unused leave. That is the default. Calculating the days themselves is covered in how many days of leave do I have.

There is one exception. Where the employer has promoted usage following the procedure set out in law and the employee still did not take the leave, the obligation to pay the allowance falls away. That is the leave usage promotion scheme.

It takes effect only if the procedure is followed exactly

This is the heart of it. The employer simply saying "please use your leave" has no effect. Both steps set out in law must be taken.

Step one — six months before the end of the usage period, the employer must tell each employee how many days remain and request in writing that they submit a plan for when they will be taken. The employee then has 10 days from the request to submit the plan.

Step two — if the employee does not submit a plan, the employer must set the dates itself and notify them in writing by two months before the end of the usage period.

If either step is missing, or if it was done verbally or by an internal posting rather than in writing, the promotion has no effect. In that case the unused leave remains payable.

What counts as "in writing" — email yes, noticeboard no

This is frequently disputed. Paper is the starting point, but an electronic document that reached the individual employee and whose contents can be verified is interpreted as sufficient. A notice sent to the individual by company email or through the electronic approval system falls here.

Conversely, forms that are not individual notices — a noticeboard announcement or a group messenger post — are difficult to accept as promotion. If the notice did not come to you personally, there is room to contest the procedure.

If the employer set the date — what if you turn up and work?

This is the murkiest case in practice. If an employee comes in and works on a leave day the employer designated, the employer must refuse to accept the labour for the promotion to remain effective.

Concretely, that means telling the employee clearly that the day is designated leave and that they should go home, and not assigning work. Where work was assigned anyway with no such step, the employer accepted the labour, and the leave does not lapse; the allowance can be claimed.

So if you end up working on a designated day, keeping a record of the instruction to work matters.

Some leave does not lapse even with promotion

It does not apply to everything. Unused leave arising on departure is settled regardless of promotion. Even where the employer ran the procedure, leave outstanding at the point of leaving is paid.

Equally, leave from a year in which the employer did not run the procedure remains alive. Promotion must be carried out separately for each year. Departure settlements generally make more sense read alongside the severance pay calculation.

What to do at the receiving end

If you receive the first notice, submitting a usage plan within 10 days works in your favour. Once a plan is in, the employer cannot designate dates at will. The trick is to set dates you can realistically take.

If work genuinely makes it impossible, put that on the record. Where a plan was submitted and approval was refused because of workload, the position changes: the employee did not fail to take it, the employer prevented it.

Some employers do not run promotion at all

Not every company uses the scheme. The procedure carries an administrative burden, and smaller employers often simply settle the allowance instead.

So if no notice arrived at year end, the unused leave remains payable. Check the payslip to see whether it was settled and ask HR if it is missing. A claim is possible within the three-year limitation period for wage claims.

In summary

Unused leave lapses only where promotion was carried out in writing and through both steps. Noticeboard announcements and verbal guidance do not qualify, and it has no effect if work was assigned on the designated day. Leave outstanding at departure is always settled. On receiving a notice, submitting a plan within 10 days is the safest course.