Updated guidance – Holiday Leave during furlough

The Department for Business, Energy and Industrial Strategy has just published guidance on workers entitlement to holiday and holiday pay during the COVID-19 pandemic.

Here is a link to the full guidance  https://www.gov.uk/guidance/holiday-entitlement-and-pay-during-coronavirus-covid-19

We would like to draw your attention to the following:

  • Furloughed workers continue to accrue entitlement to annual leave.
  • Furloughed workers can take holiday without bringing the period of furlough to an end.
  • Employers can require workers to take holiday when on furlough. However, the employer does need to 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’.
  • Holiday pay during furlough must be calculated in line with current legislation, i.e. based on a workers normal remuneration. So where it has been agreed that a worker will be paid a lower amount whilst on furlough, if a worker takes annual leave then the holiday pay will be higher and the employer must make up the difference.

    So for example, if a worker is being paid at 80% and then they take annual leave, they will need to be paid at 100% for the days taken as annual leave, with the employer making up the 20% difference. As taking holiday does not break the furlough period, the employer will be able to continue to claim the 80% grant from the government.
  • Bank holidays – if a furloughed worker would usually have had the bank holiday as annual leave, there are two options:
    • The bank holiday is taken as annual leave – in this case the employer must pay the correct holiday pay, i.e. may need to ‘top up’ the pay to 100%.
    • The bank holiday is deferred – in this case the bank holiday is not taken as annual leave at that time. However, the worker must still receive the day of annual leave that they would have received and so the holiday is deferred until a later date.
  • Carrying annual leave into future years – where it has not been ‘reasonably practicable’ for a worker to take some or all of their holidays due to the effects of coronavirus, the untaken amount may be carried forward into the following two leave years – see full guidance for details.

As the COVID-19 situation and the furlough scheme continues, these considerations are becoming increasingly important and we recommend that you consider the implications carefully. Whilst we can provide you with some support and guidance in this area you may need to seek further assistance from your usual HR source or take legal advice.

Please do not hesitate to contact Mark Fenton at [email protected] if you require further assistance.