Furloughed workers and holiday entitlement
The Government announced the extension to the Coronavirus Job Retention scheme on the 12 May 2020. The current scheme will continue in force until 31 October 2020 and with around 935,000 employers choosing to furlough employees in the UK , concerns have been raised about the accrual of up to eight months’ worth of holiday whilst being furloughed and the future practical and financial impact of this when eventually those employees return to work or their employment ends. Another concern relates to those returning former employees who would otherwise have been excluded from the furlough scheme because they had changed jobs and Government subsequently allowed to be voluntarily re employed and then furloughed to mitigate hardship. They too acquire holiday entitlement.
There has been some debate as to the extent to which employers could seek to reduce the burden of this holiday entitlement by insisting that employees took leave whilst being furloughed. This has been resolved by further Government guidance published on 13 May 2020. This states that employers can compel employees to take holiday during furlough. The relevant part of the guidance states: “If an employer requires a worker to take holiday while on furlough, the employer should consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday”.
Employers should be aware that the notice requirements for an employer requiring an employee to take leave is double the length of the holiday, for example if an employer requires an employee to take 5 days annual leave then they would need to give 10 days’ notice.
Bank holidays can also be taken as annual leave, in the usual way, if the employer and the worker agree that the bank holiday can be taken in this way while on furlough.
If an employer requires a furloughed employee to take annual leave, then they must be paid in full for the holiday days taken. As taking holiday does not break the furlough period, the employer can continue to claim the 80% grant from the government to cover most of the cost of holiday pay and top up the remainder of the pay by 20%.
This follows the earlier decision on 27 March 2020 to allow the carry forward of up to four weeks accrued holiday leave where this holiday leave was not taken in the current holiday year as a result of the effects of Covid 19. This leave can be taken in the following two years and was introduced to alleviate pressure on employers where workers would otherwise have been pressing to take leave rather than lose the opportunity to do so due to the “Take it or lose” it rule inherent in the Working Time Regulations 1998.
If you have further questions on this particular matter, please do not hesitate to contact our employment team at email@example.com for any further advice. This general guidance is correct as at 15 May 2020 but may be subject to change. We strongly recommend that specific advice is sought as needed.