Hiring glossary
What is annual leave?
Annual leave is paid time off work that an employee is entitled to each year for holidays and rest, with the legal minimum set by each country and the actual amount set by the contract or leave policy.
In the UK, almost all workers are entitled to 5.6 weeks’ paid holiday a year, which is 28 days for someone working five days a week. Statutory paid holiday is capped at 28 days, and an employer can choose to count bank holidays within it. Part-time workers get the same 5.6 weeks pro rata (16.8 days for a three-day week), and irregular-hours and part-year workers accrue holiday based on hours worked.
In Australia, the Fair Work Act gives full-time and part-time employees four weeks of paid annual leave for each year of service, or five weeks for shiftworkers as defined in their award or agreement. It accrues progressively with ordinary hours and carries over from year to year. Casual employees are not entitled to paid annual leave. In Canada, under the Canada Labour Code, federally regulated employees are entitled to at least two weeks’ vacation after one year, three weeks after five consecutive years and four weeks after ten, with vacation pay of 4%, 6% and 8% of wages respectively; each province sets its own minimum for everyone else.
In the US, the Fair Labor Standards Act does not require payment for time not worked, such as vacations, so the Department of Labor says vacation and other paid time off are a matter of agreement between employer and employee (or their representative). In India, the Occupational Safety, Health and Working Conditions Code 2020, in force since 21 November 2025, entitles a worker who has worked 180 days or more in a calendar year to one day of paid leave for every 20 days worked, and state shops and establishments laws add their own rules; in India this leave is usually called earned leave or privilege leave.
A clear leave policy states the annual entitlement, whether public holidays are included, how leave accrues in the first year, how much notice to give before booking, how much can be carried over and what happens to unused leave on leaving. Put the headline figure in the offer letter so it is part of the agreed terms. This is general information, not legal advice.
Also called: holiday entitlement, paid time off (PTO), vacation leave, earned leave (India).
Example
An employer with offices in London and Sydney writes one policy with two local entitlements: 25 days plus bank holidays for UK staff (above the 5.6-week minimum) and four weeks plus public holidays for full-time Australian staff, both pro rata for part-time employees.
Related terms
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