A staff holiday policy explains how annual leave works in the business: when the leave year runs, how employees request time off, how managers make decisions and what happens when requests overlap.
A clear policy does not need to be complicated. Its job is to make the holiday process predictable for employees and consistent for managers.
The policy should work alongside employment contracts and current statutory holiday rules. It should not reduce a worker's legal entitlement.
1. Define the holiday year
State the start and end dates of the company's leave year. Acas says employers that use a fixed leave year should tell workers and record it in contract terms or another agreement document.
Common examples are 1 January to 31 December or 1 April to 31 March.
2. Explain holiday entitlement
The policy should explain the company's normal annual leave entitlement, whether bank holidays are included, and how entitlement is handled for part-time employees or people joining part way through the leave year.
Most UK workers are entitled to at least 5.6 weeks of statutory paid holiday each leave year.
3. Explain how employees request holiday
Employees should know where requests must be submitted and how much notice is expected.
- Where the employee should submit the request.
- Normal minimum notice.
- Whether longer periods require extra notice.
- Whether leave is only confirmed after approval.
- Who approves requests.
4. Explain how requests are approved
Managers should understand what they are expected to consider before approving leave, such as staffing levels, existing approved absence and operational needs.
Acas recommends handling requests fairly and consistently. Employers can refuse particular holiday dates, but workers must still have the opportunity to take their statutory entitlement.
5. Set out how holiday clashes are handled
Popular periods such as Christmas, summer holidays and school holidays can create overlapping requests.
The policy should explain the company's normal approach. That could include first-come-first-served, minimum staffing requirements or a fair rotation for especially popular dates.
6. Explain bank holiday treatment
GOV.UK confirms that bank holidays can be included within statutory annual leave rather than being additional days.
The policy should therefore make clear whether bank holidays are included in the employee's allowance or provided on top.
7. Explain carry-over rules
Set out whether contractual holiday can normally be carried into the next leave year and how much.
Statutory carry-over rules can apply in specific circumstances, including sickness, statutory family leave and where an employer has not given the worker a reasonable opportunity to take leave.
8. Explain what happens if someone is sick
Employees should know how to report sickness and what happens where sickness overlaps with booked holiday.
Statutory annual leave continues to accrue during sickness absence, and statutory leave that cannot be used because of illness can be carried over in relevant circumstances.
9. Cover employees who leave
The policy should explain how holiday is dealt with during notice periods and in final pay.
Employers must pay for untaken statutory leave when employment ends. If an employee has taken more holiday than they have accrued, a deduction from final pay is only allowed if this was agreed beforehand in writing.
10. Keep records
From 6 April 2026, employers must keep records of annual leave and holiday pay for at least 6 years.
Acas says these records can be kept in any reasonable format, including a spreadsheet or an online management system.
A simple policy structure
Your holiday policy could include:
Leave year → entitlement → bank holidays → requesting leave → approval rules → overlapping requests → carry-over → sickness → leaving employment → record keeping.
Awayly can help put the day-to-day parts of that policy into practice through holiday management software for requests, approvals, allowances and team availability.
Official sources
- Acas — Asking for and taking holiday
- Acas — Carrying over holiday
- Acas — Keeping holiday records
- GOV.UK — Holiday entitlement
This guide provides general information for UK employers and teams. It is not legal advice. Employment circumstances can differ, so check current official guidance or obtain professional advice where needed.