As the leave year ends, if your employees still have annual leave entitlement, you might allow them to carry over the outstanding entitlement into the next year. You can enable this either for all employees, or individual employees.
Enable carry over annual leave for all employees
From the left, choose Company settings, then Payroll set-up.
Under the Leaves section, click Edit annual leave.
Scroll down to the Carry over section.
Select the option to Carry over some days/ hours.
Add the maximum number of days that can be carried over to the next year.
Click Next, then Save.
Note: Any outstanding leave that an employee has over your maximum limit will be lost.
Enable carry over annual leave for an individual employee
From the employee's record, click the Leaves tab.
Under the Annual leave section, click Customise annual leave policy.
Under the Carry over section, choose the relevant option in the Annual leave carry over method drop-down.
Enter the maximum annual leave days or hours that can be carried over.
Click Save.
Override or edit carry over leave in bulk
Typically, it's best to set up carry over leave during your onboarding. Otherwise, it must be set up no later than the final month of the leave year, before you run your payroll.
If you forget to do this, or if you need to override the number of days or hours carried over, you can import these details. To do this:
From the left, choose Imports, then More imports.
Under the Leaves section, click Edit annual leave settings.
Click Download a template.
From the downloaded template, edit the Carry over annual leave days/hours from previous year column.
Upload the completed file to PayFit.
Tip: To check an employee's new entitlement, in their record, click the Leaves tab, then under the Annual leave section, click Annual leave. A new window appears displaying the Carry over from previous year value.
Paying employees in lieu of holiday (PILOH)
The purpose of granting leave to employees is to allow the employee to benefit from paid time away from work. The law does not allow the employer and employee to avoid taking the statutory minimum holiday entitlement, via a payment in lieu of holiday at the end of the leave year.
The statutory annual leave entitlement is 5.6 working weeks. These annual leave days cannot be traded for a payment in lieu of holiday. However, if you offer your employees more holidays than the statutory minimum, i.e. contractual, then the employer and employee can make their own arrangements for the excess days not taken.
For example, if an employee has a contractual entitlement to 40 days’ holiday in the year and takes 30 days, the employer might agree to pay the employee in lieu of the extra 10 days accrued.
Paying employees in lieu of holiday (PILOH) when their contract is terminated
The exception where PILOH is permitted is when an employment contract is terminated. In this case, the employer should make a payment in lieu of accrued holiday upon employment termination when the employee has taken less leave than has been granted for the portion of the year that they have worked. For further information, please refer to our Help Centre article.