PTO rollover policy: how to carry over unused leave (UK, US and EU rules, examples and a sample clause)

Short answer: a PTO rollover policy says how many unused days move into the next leave year and how long they last there. For most small companies the best default is a capped carry-over with an expiry: up to 5 days roll over and must be used by 31 March. Check the law first: in the UK and the EU the statutory minimum can only lapse if you gave people a real chance to take it and warned them in writing, and in California, Colorado and Montana earned vacation can never be forfeited. Handle sickness and family leave as exceptions, write the rule into one paragraph of your handbook, and let a leave tool apply the cap and the expiry automatically (Bueggio HR does, from €1.30 per user per month).

Every December the same thing happens. Half the team discovers they still have eight days left, the other half has none, and the manager of a twelve-person team receives five requests for the same week between Christmas and New Year. In January someone asks whether "last year's days" still count, and nobody is quite sure what was agreed. A rollover policy exists to answer that question once, in writing, before it becomes a dispute.

This guide is about designing that rule: the five models, what the law allows in the UK, the US and Europe, how to choose a cap and an expiry, worked examples, a sample clause you can adapt and how to run it without a spreadsheet. If you want the other side of the coin, what happens to a single unused day (carried over, lost or paid out), read our guide to unused vacation days. This is operational guidance, not legal advice: confirm anything contractual with an employment lawyer.

What a rollover policy is (and what it is not)

PTO rollover, carry-over and carry-forward all mean the same thing: unused paid leave from one leave year added to the next. The policy has to answer four questions:

• How much can roll over: nothing, a capped number of days, or everything.
• How long carried days last: until used, or until a deadline such as the end of the first quarter.
• Which order days are spent in. Spending carried days first is the fair default; otherwise an expiry can wipe out days the person thought they had already used.
• Which exceptions apply: sickness, maternity and other family leave, or a manager who cancelled booked holiday for business reasons.

It is not the same as unlimited PTO, where nothing accrues and so nothing can roll over, nor as an accrual cap, the US mechanism that stops new PTO from accruing once a balance reaches a ceiling. And it is not a way to swap holiday for money: within the EU and the UK the statutory minimum cannot be paid out while employment continues.

The five models, side by side

In practice most European companies combine two of them: the statutory minimum follows the law, and the extra contractual days follow a capped carry-over with an expiry. Most US companies combine an accrual cap with either use-it-or-lose-it (where allowed) or a small carry-over.

What the law allows

United Kingdom

Workers are entitled to 5.6 weeks of paid holiday (28 days on a five-day week), made of two parts with different carry-over rules:

• The basic 4 weeks must normally be taken in the leave year. It carries over in three cases: if the worker could not take it because of sickness (it must then be used within 18 months of the end of the leave year it belongs to), because of maternity, paternity, adoption or shared parental leave, or because the employer failed to give a reasonable opportunity to take it, encourage it and warn that it would be lost (in that case it keeps carrying over until the failure is put right).
• The additional 1.6 weeks and any contractual extra can be carried over if the contract or an agreement allows it, and can expire otherwise. This is where your rollover policy actually operates.

Irregular-hours and part-year workers have their own accrual rules and can carry over their whole statutory entitlement in the sickness and employer-failure cases. Untaken statutory holiday is paid out when employment ends.

United States

There is no federal requirement to give paid vacation at all (the Fair Labor Standards Act does not cover it), so rollover is a matter of state law and of what your written policy promises. Three patterns:

• Forfeiture banned. California, Colorado and Montana treat earned vacation as wages that cannot be taken away, so use-it-or-lose-it clauses do not work there. Employers use an accrual cap instead: once a balance reaches, say, 1.5 times the annual amount, no more PTO accrues until some is used.
• Forfeiture allowed with clear notice. In a number of states use-it-or-lose-it is fine if the written policy says so clearly and in advance.
• No specific rule. In most states the policy and the employment contract decide, and courts enforce what was written.

Separate from rollover, many states regulate payout at termination, and paid sick leave laws in several states and cities have their own carry-over rules (usually: unused sick time carries over, subject to a cap). Keep PTO and statutory sick time as separate policies if you operate in those places.

The European floor, and the countries next door

Across the EU, the Working Time Directive (article 7) guarantees four weeks of paid leave that cannot be replaced by money while employment continues. The Court of Justice added the rule that matters most for rollover: leave can be lost at year end only if the employer can show it actually encouraged the person to take it and warned them in good time that it would lapse (Max-Planck, C-684/16, and Kreuziger, C-619/16). A silent use-it-or-lose-it clause is not enough. Leave missed because of illness must be allowed to carry over, although national law can set a limit (the Court accepted 15 months).

If your team spans several of these countries, the carry-over rule belongs on each country's one-page rule sheet. Our guide to managing leave across multiple countries explains how to set that up.

How to choose your rule in five steps

1. Start from the legal floor. Write down, per country, which days the law protects (the UK basic 4 weeks, the EU four weeks, earned vacation in California) and which are yours to design (the UK additional 1.6 weeks, contractual extras, PTO in most US states).
2. Pick a cap. Five days, or one working week, is the most common choice for a 20 to 30 day allowance: enough to absorb a cancelled trip, not enough to build a hoard. Anything above ten days usually means people are not resting.
3. Pick an expiry. 31 March (three months) is the classic, mirrored by German law; six months suits seasonal businesses whose quiet season comes later. An expiry without spending carried days first is unfair, so make the order explicit.
4. Write the exceptions. Statutory leave missed through sickness or family leave carries over regardless of the cap; so do days the company asked someone to cancel. Decide who signs off exceptions and record the reason.
5. Prove you encouraged leave. In the UK and EU this is what makes any expiry valid. Show every person their balance all year round, send a written reminder in the autumn and again before the expiry, and keep a copy. Cheap insurance against a claim.

Worked examples

Take a policy of 25 days per year, up to 5 days carried over, carried days expire on 31 March and are spent first.

• Standard case. Maya ends the year with 7 days left. 5 roll over, 2 expire. Her new total is 30. She takes 3 days in February, which come out of the carried 5; on 31 March the 2 carried days still unused expire and her total becomes 28, of which 3 already used.
• Part-timer. Tom works three days a week, so his allowance is 15 days and a fair cap is 3 (pro-rata of 5). Caps expressed in weeks ("one week") do this automatically.
• Mid-year joiner. Ana joins on 1 October with a pro-rata allowance of 6.5 days and has no time to take them all. A strict cap would punish a late start; many policies let first-year staff carry over everything they could not reasonably take.
• Long sickness (UK or EU). Ben is off sick from September to January and could not take 12 days of statutory leave. Those days carry over in full despite the 5-day cap, with the legal deadline (18 months in the UK and Spain, 15 in Germany and France). Record them as an exception, not as part of the normal rollover.
• Leaver. Chloe resigns in February with 4 carried days and 2 days accrued this year still untaken. In the UK and EU the untaken statutory leave is paid out with her final salary; check the contract for the rest. Our article on annual leave during the notice period covers the last weeks in detail.

A sample rollover clause

Adapt the numbers, check them against the law where each person works, and paste it into your handbook:

"At the end of each leave year you can carry over up to 5 days of unused annual leave (pro-rata if you work part time). Carried days are used first and must be taken by 31 March; any carried days not taken by then will be lost. We will remind you of your balance in October and again in February. Statutory leave you could not take because of sickness, maternity, paternity, adoption or shared parental leave, or because we asked you to cancel booked holiday, is carried over in full and is not affected by the 5-day limit. Unused leave is not paid out except when your employment ends."

Pair it with the practical rules people actually ask about: how much notice to give, how many people per team can be away at once, and whether there is a shutdown week.

Spreadsheet or leave tool?

A rollover is easy to describe and fiddly to compute. In a spreadsheet you need, per person: last year's remaining balance, =MIN(remaining, cap) for the carried days, a new total, a running count of days used before the expiry date and a second formula that removes what was not used in time. It works until someone books leave that straddles the deadline, a part-timer changes hours, or two people edit the same file in January. Then it is a weekend of reconciliation and, worse, balances that employees no longer trust.

A leave tool does the same arithmetic on every booking and shows each person their own balance, which also gives you the "we told you" evidence the UK and EU rules require. Whatever you use, check three things: the cap can be set in half days, carried days are spent first, and individual exceptions are possible without breaking the rule for everyone.

How to run a rollover in Bueggio HR

In Bueggio HR the rollover is two fields and some good defaults:

1. Set the cap. In Settings, Leave types, the carry-forward card takes the maximum number of days that roll over (half days allowed, 0 means no rollover). It applies only to leave types that deduct from the allowance, so sickness or remote work never roll over by accident. The leave types guide shows the card.
2. Set the expiry. Carried days can last forever or expire 1, 2, 3, 6 or 12 months into the new leave year. Carried days are counted as used first, so an expiry only removes what genuinely was not taken in time.
3. Choose the leave year. Calendar year or any start month, so a UK April-to-March year or a French June-to-May year works without workarounds.
4. Record exceptions by hand. An allowance adjustment adds or removes days for one person and one leave year with a written reason, for example "statutory leave missed through sickness, to use within 18 months" or a first-year carry-over. Adjustments show in the person's total everywhere, from the dashboard to reports and the API.
5. Let people see their balance. Everyone sees their remaining days, including carried ones folded into the total, on their dashboard and phone; see allowances and balances. Reports with CSV export give HR the year-end picture for the whole team.

The honest limits: there is one rollover rule per company, not per country or per person (exceptions go through adjustments), the longest automatic expiry is 12 months (for an 18-month legal window, choose "never" and track the deadline), and Bueggio HR does not yet send an automatic reminder before carried days expire, so the autumn reminder is still yours to send. Pricing is one plan at €1.30 per user per month, data is hosted in Frankfurt, and the first month is free with no card.

Frequently asked questions

What is a PTO rollover policy?

A PTO rollover (or carry-over) policy decides what happens to paid time off an employee has not used by the end of the leave year. The common models are use-it-or-lose-it (unused days expire), capped carry-over (up to a fixed number of days moves to the next year), carry-over with an expiry date (carried days must be used by, say, 31 March), unlimited carry-over, and payout of unused days. The right model depends on the law where the person works: several US states forbid forfeiting earned vacation, and in the UK and EU the statutory minimum can only lapse if the employer gave a real chance to take it.

Can you carry over annual leave in the UK?

Yes, within limits. The 1.6 weeks of additional statutory leave (and any contractual extra) can be carried over if the contract or an agreement allows it. The basic 4 weeks normally has to be taken in the leave year, with three exceptions: leave missed because of sickness can be carried over and used within 18 months of the end of the leave year it belongs to; leave missed because of maternity, paternity, adoption or shared parental leave carries over; and if the employer did not give a reasonable opportunity to take holiday, encourage it and warn that it would be lost, the untaken basic leave carries over until that failure is put right.

Which US states don't allow use-it-or-lose-it PTO?

There is no federal rule on PTO in the United States, so it is decided state by state. California, Colorado and Montana treat earned vacation as wages that cannot be forfeited, so a use-it-or-lose-it clause is not enforceable there; employers usually control balances with an accrual cap instead (once the cap is reached, no more PTO accrues). Several other states allow forfeiture only if the written policy says so clearly in advance. Check your state labour department's guidance before you write the policy.

The bottom line

A good rollover policy fits in one paragraph: a cap, an expiry, carried days spent first, and exceptions for sickness and family leave. Start from what the law protects in each country, design only the part that is yours, remind people of their balance before anything lapses, and let a tool do the arithmetic. If balances are piling up anyway, the problem is upstream: see the five steps in our guide to unused vacation days, how carry-over works around maternity and parental leave, and our complete guide to leave management software. Then set your rollover rule in Bueggio HR and let January take care of itself.