A recent Employment Tribunal decision highlights a significant risk for employers: where annual leave is not properly managed, entitlement can accumulate over many years and result in substantial financial liability.

In Ageli v Sabtina Ltd, the Tribunal considered a situation in which an employee accrued more than 800 days of untaken annual leave over the course of long service. By the end of employment, this resulted in a significant award, which approached £500,000 when combined with compensation awarded for unfair dismissal and other employment-related claims.

The case is unusual in scale, but it arises from familiar workplace issues. The employee’s holiday requests had repeatedly been refused due to operational pressures, and an informal arrangement developed allowing unused leave to roll over indefinitely. Over time, this was not properly reviewed, recorded, or controlled.

Annual Leave is an ‘Entitlement’

While most employers will not face circumstances of this magnitude, the legal principles are important and widely applicable. Annual leave is a statutory entitlement which must be properly managed, and in most cases taken within the relevant leave year unless there is a clear and lawful basis for carry-over.

Situations like this tend to arise where:

• operational pressures lead to repeated refusal of leave requests without a structured alternative plan
• informal agreements develop allowing long-term carry-over of untaken holiday
• holiday records are incomplete, inconsistent, or not centrally monitored
• managers do not have clear guidance on how and when leave can be restricted

Employers need to actively manage leave

The key issue for employers is not simply whether leave is recorded, but whether it is actively managed. The Employment Rights Act 2025 introduced a legal duty requiring employers to maintain adequate records demonstrating compliance with statutory annual leave and holiday pay obligations. This includes records of annual leave entitlement, leave carried forward between leave years, holiday pay calculations and the elements included within those calculations, and any payments made in lieu of untaken leave on termination.

Employers are expected to maintain clear records of leave taken and carried forward, and to be able to evidence how statutory entitlements have been managed throughout employment. Without oversight, entitlement can accumulate over time and create unexpected liabilities, particularly where employment ends and outstanding holiday must be calculated.

For employers, the practical takeaway is straightforward: annual leave should not be left to informal practice or operational convenience. A clear system for approving, recording and monitoring holiday is essential to avoid long-term exposure