I have been working for a company for the last 6 years, my yearly vacation started as only 20 days, and has since moved to 25 days in the last year.

I have now handed my resignation notice in, and my boss said that I owe £3700 in excess leave taken. This has been added up over the 6 years. Apparently I am in the minus. I believe its -17 days. It has been worked out by tallying up all of my leave over that time.

Is it legal for the employer to do this? I am based in UK.

  • 2
    Any leave taken above your allowance should have been taken as unpaid leave. Have they already made those deductions on your payslips in the past, where you've gone over your allowance? Jun 21 '19 at 10:11
  • 7
    How did it happen that you took 17 days of paid leave you were not entitled to? Any company I know would simply deny the request if you are not entitled to paid days off.
    – nvoigt
    Jun 21 '19 at 11:54
  • 3
    One aspect to consider is that your wage will have changed over the years (deductions based on your current salary may be an unfair way to calculate unpaid leave taken five years ago). Inflation will have also changed the value of money. Jun 21 '19 at 12:43
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    @nvoigt - it may be a matter of company policy. Some companies who accrue time on each paycheck do have a policy of allowing an employee to "borrow" against future accruals for that year. This would allow you to take all your vacation in January even though you technically won't accrue it until the end of the year. Then, if you leave in February, you would technically have taken time you hadn't yet earned. Of course we don't know that's the case here, but it's a possible explanation.
    – dwizum
    Jun 21 '19 at 13:10
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    @dwizum I'd understand that explanation. It sounds a little like the excess leave has accumulated over the years and that sounds strange.
    – nvoigt
    Jun 21 '19 at 13:15

Welcome James, but you should probably address this to the StackExchange legal group.

The answer depends on too many unknowns. Your best bet is to book an appointment with a local Citizens Advice Bureau and take all company paperwork with you, especially your contract of employment and any company policy documents (employee handbook etc).

Your immediate claimed liability (how much they say you owe), depends upon whether your company has a 'carry over policy' (can you carry unused holiday from one year to the next), how much leave you have taken this year, and when the holiday year starts (this will usually, but not always, be from January).

Accruing this past even 1 period (year) end does seem somewhat negligent, never mind 6 years. They should have raised this as an issue at the time.

Finally, they can't just deduct the money from your salary; you have to agree to it (which will mean explicitly signing something to that effect. "If you do nothing for n days, you're deemed to have accepted" will land them in serious trouble). If you do owe them some / all, your CAB advisor can negotiate a payment plan with them.

  • "they can't just deduct the money from your salary" - what makes you say this? Why does one need to agree to give back money that presumably belongs to be company (given that OP was paid for what the company is seemingly trying to argue is unpaid leave, which means they were paid too much, at which point being paid too little seems logical)? And what if they take the money even if they're not strictly allowed to? Jun 21 '19 at 17:38
  • @Dukeling It means exactly that. As a bad example, if you caused your employer £10,000 damage, then they can take you to court and possibly force you to pay that damage. They can't take that money out of your salary.
    – gnasher729
    Jun 21 '19 at 18:44
  • @gnasher729 I didn't ask what it means, I was requesting that Justin back up the claim. To me a better comparison would be them accidentally paying you £10k more than your salary. Although I have no idea how unpaid leave is legally handled (in cases where there is no mutual agreement). I expect this may to a large extent come down to contracts, company policy and legal precedent (which this answer recommends looking in to, but there is still the unsupported claim). Jun 21 '19 at 19:11
  • @Dukeling, UK gov says that there are only specific circumstances in which a company may make deductions, which are listed here: gov.uk/understanding-your-pay/deductions-from-your-pay . Wages/Expenses overpayments are listed as an exception, so it's probable the company will try to classify OP's holiday as overpayment. The amount in question would likely need to be split across affordable monthly payments (minimum wage; see above reference), which require's OP's cooperation (agreement).
    – Justin
    Jun 21 '19 at 21:26

Were any pay-cuts being done against your unpaid leaves when you were paid your salary after your leaves? Generally followed industry practise is to deduct against any unpaid leaves from the due salary in the next pay cycle.

Legally speaking, you are bound by the original terms of job offer from the employer as stated in the offer letter and agreed by you, and, thereafter any applicable local laws.

First and foremost, go through your original job offer letter from the company and carefully read through the leave policy. Unless there's a clause in the offer letter specifically stating your company is entitled to seek settlements against unpaid leaves when you resign from the job, your employer can't legally ask you to pay them at the end of the employment.

It's likely a power play by your employer to discourage you from leaving your job.

  • "your employer can't legally ask you to pay them" - do you have a reference to back up this claim? If an employee takes unpaid leave, yet they were paid for it, wouldn't that logically mean they owe the company money (by the definition of "unpaid"), even if this isn't specifically addressed in a contract? Note: as long as you get your full salary, you're being paid for any leave you take. Jun 21 '19 at 16:47
  • It's not quite true that you're bound to the original terms and offer letter plus local laws. In the UK at least changes to an employment contract can be implicitly accepted if both sides start acting according to them without objecting (only 'can', it's not guaranteed). If his employer had been letting him take > 20 days and paying him for them for six years...well, maybe. It needs a lawyer to say (and knowledge of what the totals actually were - clearly the first step is indeed to read the original agreements and compare it to the total taken). Jun 23 '19 at 17:13

DISCLAIMER: I am not a lawyer.

If any unpaid leave was taken in each year before now, it should have been deducted from your salary in that year because it would have affected how much tax you have to pay in that year.

The company should also have either not authorised the extra holiday in that year OR reduced your allowance for the following year so you were straight.

If no reductions were made then it is possible you do owe them the money but it is now down to them to prove you took the extra days (presumably you put in written requests for annual leave) and at the correct rate for that year before any pay raises you may have been given since then.

  • The OP is talking about paid leave, and having requested and taken more than that allowed (e.g. 20 days paid leave are given, but he took 22). Most companies will prevent this, by turning down requests which exceed the allowance, such that OP is never in the position of owing them. All of your points are excellent, especially the tax position and having subsequent allowance reduced.
    – Justin
    Jun 21 '19 at 11:58
  • it is possible you do owe them the money OP, pay attention to this. How has the company calculated this, and is it correct? The financial value of holiday from previous years should be based upon the prevailing salary.
    – Justin
    Jun 21 '19 at 12:01
  • And they would then have to have to retroactively change your p60 for several years and recalculate your tax and of course make it all correct with HMRC Jun 21 '19 at 19:58
  • If OP asked for more than 20 days, those extra days were approved and then the employer not only paid but kept on doing it for six years....well, you do have to ask whether or not the employer has implicitly accepted a change to the contract. Even for a one-off I wouldn't say it's obvious that if you ask your employer for extra paid days off and your employer approves it and then pays you that it's automatic that they can get it back later. There must be a point where they've agreed to it. The answer advising the CAB is a good one. It needs more facts and more legal knowledge. Jun 23 '19 at 17:32

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