One of the many challenges of the coronavirus pandemic for employers has been the rapid change in employment law, including the new concept of “furlough”, introduced by the government on 20 March 2020. Whilst employers were quick to furlough workers to avoid redundancies, it was only later that questions arose about how holiday entitlement would work in conjunction with furlough. On 13 May 2020 the government published guidance on how holiday entitlement and pay operates during the pandemic.
Do workers continue to accrue holiday?
Workers who are currently entitled to statutory holiday (5.6 weeks per year) will continue to accrue that holiday including during sick leave and furlough. Employers may negotiate with workers to change their contractual terms relating to holiday over and above the statutory entitlement.
Can employers control when holiday is taken?
Employers can require holiday to be taken, or cancel holiday, provided they comply with the correct notice provisions. For example, employers with furloughed staff or staff not working at full capacity can require holiday to be taken by giving notice of double the length of the required holiday. Employers who have seen an upturn in work and are short-staffed may cancel planned holiday by giving notice of the length of the planned holiday, or otherwise require the worker not to be on leave on certain dates.
Can furloughed workers take holiday?
Taking holiday does not disrupt furlough. A worker may choose to take holiday during furlough but there is currently an academic debate as to whether an employer can compel a furloughed worker to do so. The uncertainty arises out of EU case law providing that workers cannot be required to take holiday during certain types of leave. The government guidance advises employers to consider the restrictions that a worker is under at the applicable time which would prevent them from resting, relaxing and enjoying leisure time – the fundamental purpose of holiday. Factors which might prevent this include whether the employee is shielding or a carer.
How much holiday pay applies?
Workers must receive their usual holiday pay for statutory holiday taken, including during furlough. If a furloughed worker’s pay is capped at the CJRS grant of 80%/£2,500 the employer will need to “top up” pay for holiday during furlough.
What about bank holidays?
If a worker would normally be treated as on holiday on any bank holiday, then this will not change unless the employer requires them to work, providing them with the correct notice and a day in lieu. If the worker is furloughed, the employer will need to top them up to full rate for a bank holiday if they have been paid at the reduced rate under the furlough scheme.
Can holiday be carried over?
Emergency legislation has been passed to provide businesses with the flexibility they need to respond to the pandemic. This permits the carry-over of four weeks’ holiday where the impact of coronavirus means it was not “reasonably practicable” to take it in the holiday year. Factors to consider include whether the business has faced a significant increase in demand, practical options for temporary cover of essential activities, and whether the worker can take the holiday later in the leave year.
The guidance states that furloughed workers are unlikely to need to carry forward holiday as they can take it during furlough in most cases.
Employers should do everything reasonably practicable to ensure holiday is taken in the leave year to which it relates and carried over leave should be taken at the earliest opportunity. Carried over leave has further protections and an employer must have good reason to refuse to allow it to be taken on particular dates.
Clare Gilroy-Scott is a partner in the employment team at Goodman Derrick LLP