Holiday and Furlough How does it work?
The issue of holiday and employees furloughed under the Government’s Coronavirus Job Retention Scheme (CJRS) was one of the more tricky issues that the CJRS threw up. The initial uncertainty wasn’t helped that the first few reiterations of the CJRS Guidance ducked the issue completely.
That left plenty of questions, such as:
- Do employees who have been furloughed still accrue holiday?
- What do we have to pay them if they take holiday whilst furloughed? and;
- Can we force employees to take holiday whilst furloughed?
To help employers deal with the issue, the Government has now produced a guide on this:
holiday entitlement and pay during coronavirus.
Whilst this guidance has no statutory effect, meaning Employment Tribunals are not obliged to follow it, I would be surprised if a Tribunal took an alternative view.
The main points worth noting are:
- Confirmation that employees who have been placed on furlough leave continue to accrue statutory holiday entitlement, and any additional holiday provided under their contract of employment.
- Employees can take holiday during furlough without disrupting furlough. This means that an employee on holiday whilst furloughed still qualifies under the CJRS.
- Employers can require employees to take holiday during furlough, subject to complying with the relevant notice requirements. If an employer requires an employee to take holiday whilst on furlough, the employer should consider whether any restrictions the employee is working under, such as the need to socially distance or self-isolate, would prevent the employee from resting, relaxing and engaging in leisure time which is the fundamental purpose of holiday.
- Where a bank holiday falls within the furlough period and the employee would normally have that bank holiday off as part of their annual holiday entitlement, there are two options. Firstly, the employee takes that bank holiday as annual leave and it is paid at the correct rate. Secondly, the bank holiday is deferred to be taken at a later date.
- Holiday pay for holiday taken during furlough needs to be paid at the right rate. For many employers this will mean topping up pay for those days taken as holiday to the pre-furlough rate of pay rather than any reduced rate that is operating during the furlough period.
- More details on the emergency legislation which allows employees to carry forward holiday entitlement into the next two holiday years, where the impact of Coronavirus means that it is not reasonably practicable to take it in the current leave year; and
- In terms of whether it is or isn’t reasonably practicable to take leave in a leave year, various factors will need to be considered including, whether the business has faced a significant increase in demand due to Coronavirus that would reasonably require the employee to be at work that cannot be met through alternative practical measures.
We have found one of the principle issues has been employers who want to require employees to take their holiday during furlough to avoid large amounts of holiday being untaken, which employees want to take when they are back to work. Whilst the guidance makes it clear that this is permissible, care will need to be taken in relation to the notice that is given, consideration as to whether it is a proper holiday and ensuring the correct payments for the holiday element of furlough are made.
If you have any queries on holiday and furlough or the CJRS in general, please contact Matt Jenkin in our Employment Team.