Can an employer pay someone instead of giving them annual leave

In most countries, including all EU member states and the UK, you cannot substitute cash for statutory leave whilst someone is still employed. A pay-in-lieu arrangement is generally only permitted when employment ends and unused leave is settled in the final paycheck.

Does unused annual leave carry over to the next year

Carry-over rules vary by country. In the UK and across the EU, statutory leave must generally be used in the leave year, though illness-related carry-over rights exist. Some jurisdictions allow or require full carry-over. Check local law before setting a use-it-or-lose-it policy.

Does annual leave accrue during sick leave or parental leave

In the EU and UK, employees continue to accrue statutory annual leave entitlement whilst on sick leave or statutory parental leave. If they cannot take their leave because of illness, they are usually entitled to carry it over into the next leave year.

How do public holidays relate to annual leave

Public holidays can sit inside or on top of the statutory leave entitlement, depending on country and contract. In the UK, employers may count bank holidays as part of the 28-day minimum. In France, public holidays are separate from the 25-day entitlement. Always check what the employment contract says.

Glossary

Annual leave

Annual leave is the paid time off employees are legally entitled to take each year, separate from sick leave. Statutory minimums vary widely by country, from 20 days in the EU to no federal floor in the US.

Reviewed by Teamed's in-house employment-law team·Last updated 24 June 2026

What is Annual leave?

Annual leave is the paid holiday entitlement every employee accrues during the year, giving them the right to take time off without losing pay. How much they get depends on where they work. The European Union's Working Time Directive sets a floor of four weeks (20 working days) for all member states, and many countries go further: the UK gives most workers 28 days, France gives 25, and Austria gives 25. The United States has no federal minimum at all, so paid holiday is left entirely to employer policy or, in some cases, state law. Beyond the statutory floor, you can offer additional contractual leave to attract and retain people. When someone works part-time, entitlement is usually calculated pro rata. If you are hiring across borders, each country's rules apply to the employee in that country, regardless of where your company is based.

What does the EU minimum actually cover

The EU Working Time Directive guarantees at least four weeks (20 working days) of paid annual leave. This cannot be replaced by a cash payment while someone is still employed. Many EU countries legislate above this floor, so always check local law for the exact entitlement.

Why is the US different from everywhere else

The Fair Labor Standards Act (FLSA) does not require any paid vacation. There is no federal floor, making the US unusual among developed economies. Employers set their own policies, and a handful of states have their own rules, but there is no nationwide statutory minimum.

How does annual leave work when you hire internationally

Each employee's entitlement follows the law of the country where they work, not where your company is registered. If you hire through a global employment platform, the platform's in-house employment-law team ensures local statutory minimums are met and reflected in each employment contract.

Key facts

EU statutory minimum: 20 working days per yearSet by the EU Working Time Directive. Cannot be replaced by a cash payment whilst employment continues.Source: European Commission, Working Time Directive· verified 2026-06-24
UK statutory minimum: 28 days per year (full-time)Under the Working Time Regulations 1998. Includes bank holidays if the employer chooses. Part-time workers receive a pro-rata equivalent.Source: GOV.UK, Holiday entitlement· verified 2026-06-24
US federal minimum: NoneThe FLSA does not require paid vacation. Entitlement is set by employer policy or, in some cases, state law.Source: US Department of Labor, Vacation Leave· verified 2026-06-24

Frequently asked questions

Can an employer pay someone instead of giving them annual leave
In most countries, including all EU member states and the UK, you cannot substitute cash for statutory leave whilst someone is still employed. A pay-in-lieu arrangement is generally only permitted when employment ends and unused leave is settled in the final paycheck.
Does unused annual leave carry over to the next year
Carry-over rules vary by country. In the UK and across the EU, statutory leave must generally be used in the leave year, though illness-related carry-over rights exist. Some jurisdictions allow or require full carry-over. Check local law before setting a use-it-or-lose-it policy.
Does annual leave accrue during sick leave or parental leave
In the EU and UK, employees continue to accrue statutory annual leave entitlement whilst on sick leave or statutory parental leave. If they cannot take their leave because of illness, they are usually entitled to carry it over into the next leave year.
How do public holidays relate to annual leave
Public holidays can sit inside or on top of the statutory leave entitlement, depending on country and contract. In the UK, employers may count bank holidays as part of the 28-day minimum. In France, public holidays are separate from the 25-day entitlement. Always check what the employment contract says.

Related terms

Note

This is general information, not legal advice. Statutory rules vary by country and change over time.

Glossary

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Last verified 2026-06-24