Annual leave is governed by the Working Time Regulations (Northern Ireland) 2016 (“WTR (NI)”). Under these regulations (which implement the Working Time Directive (“WTD”)), an employee in is entitled to a minimum of 5.6 weeks annual leave. The legislation differentiates between the WTD entitlement of 4 weeks (“WTD leave”) and the domestic legislation entitlement of 1.6 weeks (“additional annual leave”). Accordingly, the two entitlements have different laws governing carrying over untaken leave to the next holiday year.

Regulation 15(1) of the WTR(NI) states that, WTD leave must be taken in the same holiday year it is accrued and cannot be carried into the following leave year. In contrast, regulation 16(6) od the WTR(NI) states that additional annual leave can be carried forward to the next holiday year if there is a relevant agreement (usually the employment contract) between the parties.

However, at the end of 2018, the ECJ in Kreuziger v Berlin/Max Planck Gesellschaft v Shimizu held that a worker does not automatically lose their accrued but untaken WTD leave at the end of a reference period. The onus is on the employer can show that it enabled the worker, via provision of sufficient information, to exercise their entitlement.

In short, employers cannot rely on the fact that workers have not asked to exercise a right to annual leave. Therefore, the ‘use it or lose it’ principle under the WTR(NI) may be incompatible with the WTD in situations where employers have not (a) provided employees with the opportunity to take leave or (b) explained to employees if leave is not taken it will be lost.

This decision implies that the burden of proof is on employers to demonstrate that they have “exercised all due diligence” to enable workers to take annual leave. Practically, employers will have to do more than simply have an annual leave policy in place and should actively encourage workers to take annual leave. However, it is important to consider that this decision is only in relation to WTD leave, not additional annual leave under the WTR(NI).

In terms of unused annual leave in cases of absence, the ECJ has expressed the view that employees who have been absent due to maternity, paternity, adoption, parental or shared parental leave or long term sickness may carry any unused statutory entitlement of 4 weeks over to the next holiday year. This approach was followed by the UK courts in the case of NHS Leeds v Larner [2012] EWCA Civ 1034.