How to Create a Leave Policy for Your UK Business: Template & Guide
Every UK employer needs a clear leave policy. It sets expectations, reduces disputes, and ensures you meet your legal obligations under the Working Time Regulations 1998. This guide walks you through creating one from scratch, with a template you can adapt for your business.
Why you need a written leave policy
Without a formal policy, you risk:
- Inconsistent decisions — managers approving leave differently across teams.
- Legal disputes — employees challenging leave decisions with no documented process.
- Understaffing — too many people off at the same time with no booking rules.
- Carry-over confusion — unclear rules about what happens to unused leave.
What your leave policy should cover
1. Annual leave entitlement
State the statutory minimum (5.6 weeks / 28 days for full-time) and any additional days your company offers. Clarify whether bank holidays are included in or additional to the entitlement.
2. Leave year
Define when the leave year starts and ends. Common choices are January–December or April–March (aligning with the tax year). State how entitlement is calculated for employees who join mid-year.
3. How to request leave
Describe the process: how far in advance requests must be made, who approves them, and how employees submit requests (email, HR system, or leave management software like Leavely).
4. Approval rules
Set guidelines for when leave can be refused — for example, during busy periods, if too many people are already off, or if insufficient notice was given. The statutory notice period is twice the length of the leave requested (e.g., 2 days' notice for 1 day off).
5. Carry-over rules
State whether unused leave can be carried over, and if so, how much and by when. The statutory allowance permits up to 1.6 weeks (8 days) to be carried over if agreed. Many employers adopt a "use it or lose it" approach for anything above the statutory carry-over.
6. Leave types
List every type of leave your company offers:
- Annual leave (holiday)
- Sick leave — include your reporting process and SSP details.
- Compassionate leave — bereavement, family emergencies.
- Parental leave — maternity, paternity, shared parental, adoption.
- TOIL (time off in lieu) — if employees can earn time back for overtime.
- Unpaid leave — when it's available and how to request it.
- Study leave — if applicable.
7. Sickness absence process
Define how employees report sick (who to contact, by when), when a doctor's note (fit note) is required (after 7 consecutive days), and your return-to-work interview process.
8. Company shutdown periods
If your business closes for Christmas or other periods, state this clearly. Explain whether shutdown days are deducted from the employee's annual leave allowance.
Free leave policy template
Leave Policy — [Company Name]
Effective date: [Date]
Applies to: All employees of [Company Name]
1. Annual Leave Entitlement
Full-time employees are entitled to [28/25+8 bank holidays] days of paid annual leave per year. Part-time employees receive a pro-rata entitlement based on their contracted hours. The leave year runs from [1 January] to [31 December].
2. Requesting Leave
Leave requests must be submitted at least [X days/weeks] in advance via [method]. Your line manager will respond within [X working days]. Requests may be declined if too many team members are already absent or during peak business periods.
3. Carry-Over
Up to [X] days of unused annual leave may be carried over to the next leave year, and must be used by [date]. Any leave not taken or carried over will be forfeited.
4. Sickness Absence
If you are unable to attend work due to illness, you must notify [your manager/HR] by [time] on the first day of absence. A fit note is required for absences lasting more than 7 consecutive days. A return-to-work interview will be conducted after every absence.
5. Other Leave Types
The company also provides: compassionate leave (up to [X] days), parental leave (as per statutory entitlement), and unpaid leave (at management discretion). TOIL may be agreed with your line manager for pre-approved overtime.
6. Company Shutdowns
The company closes for [X days] over Christmas. These days will be deducted from your annual leave allowance. You will be notified of the exact dates by [date] each year.
How to enforce your leave policy consistently
- Use leave management software — manual tracking leads to errors and inconsistency. Tools like Leavely automate balances, approvals, and policy enforcement.
- Train managers — ensure all managers understand the policy and apply it consistently.
- Include it in onboarding — every new starter should read and acknowledge the leave policy.
- Review annually — update the policy each year to reflect changes in legislation or company practice.