There are a number of potential dangers to you, including burnout, a later demand for pay or time off in lieu, and health and safety issues.
In respect of burnout, there is not much you can do, apart from consistently encouraging your employee - if necessary in writing - to take more holiday, and keeping an eye on him (or her) for other symptoms of stress.
In respect of a later demand for pay, or time off in lieu, make it plain in your terms and conditions of employment that employees are expected to take their holidays within the year (or such later time as you think reasonable - see question six). Also make it plain that you do not as a rule provide pay in lieu of holiday (except in respect of any holiday entitlement outstanding from the final year of employment).
In respect of health and safety issues, you should consider whether the employee is endangering himself, or perhaps even other employees, by working without taking appropriate rest periods. If so, you will have to insist that holiday be taken, if necessary making it a matter for disciplinary action.
