A holiday buy back scheme lets an employee sell untaken leave back to the employer for pay; a holiday purchase scheme lets them buy extra days out of salary. Both are common in larger companies and both are within reach of a small employer, with two constraints. The statutory 5.6 weeks cannot be sold, only leave above it, and whatever is bought or sold has to be recorded against the employee like any other change to the entitlement. This page sets out the rules, the arithmetic for pricing a day, and what unlimited annual leave does to the record, which is more than it seems.
What can be sold: only leave above the statutory minimum
The 5.6 weeks, 28 days for a five-day week, is a rest entitlement and cannot be exchanged for pay except when someone leaves. A holiday buy back scheme therefore only works where the contract gives more than the minimum, and only the days above it can be bought back. An employer offering 33 days can buy back up to five; one offering 28 has nothing to buy. The policy should state the cap and the window in which requests are made.
Buying annual leave: pricing a day
A day of leave bought or sold is usually priced at a day's pay: annual salary divided by the working days in the year, 260 for a five-day week. Buying five extra days on a five-day week reduces salary by five days' pay, spread across the year. A part-timer's day is priced on their own pattern. Salary sacrifice for purchased leave has pay and pension consequences and the payroll bureau should confirm the treatment before the scheme opens.
The holiday purchase scheme record: bought days are entitlement, sold days are taken
A purchased day is added to the entitlement for that leave year and does not carry over unless the policy says so; a sold day is recorded as taken, with a note that it was sold, so the balance stays right and the year-end figure is honest. Both belong as lines against the employee in the same record as the requests. On the paid wall chart on this site they are entered as adjustments with a reason, so the history shows why a balance changed.
Unlimited annual leave changes the record, not the law
An unlimited policy still owes every worker the statutory 5.6 weeks, still has to be able to show they took it, and still needs a leaver's accrued balance for the final pay, which is usually calculated on the statutory minimum. In practice unlimited leave needs a fuller record, not an emptier one: every request logged, so the employer can show the minimum was taken and can see when someone is taking none, which is the quiet failure of unlimited schemes.
Questions people ask about holiday buy back scheme
Can employees sell their holiday?
Only leave above the statutory 5.6 weeks, and only if the employer runs a scheme. The statutory minimum cannot be exchanged for pay except on leaving.
How is a bought or sold day priced?
Usually a day's pay: annual salary divided by the working days in the year, with a part-timer's day on their own pattern. Confirm the payroll and pension treatment before opening the scheme.
Do purchased days carry over?
Only if the policy says so. Most schemes require them to be taken in the year they were bought.
Does unlimited annual leave remove the need to track it?
No. The statutory minimum still has to be shown to have been taken, and a leaver's accrued balance still has to be worked out, so the record matters more, not less.