Can staff take holiday during furlough? If so, at what rate should it be paid? Can furloughed workers carry forward holiday under the 2020 amendment to working time rules?

The Government has published guidance on Coronavirus and the taking of holiday.  A link to the guidance is below.

Holiday laws are a notoriously difficult and unclear area for employers to navigate. There are currently competing views on a number of questions about holidays and holiday pay, relating to furlough leave. The guidance seeks to clarify some of them but importantly, it is only guidance. It will be taken into account by Employment Tribunals deciding holiday pay disputes but it is not legally binding. Therefore, whilst intended to shed light on how holiday rules operate during the pandemic, if in any doubt about the legal rules then advice should be taken. This Employment Express is a general summary of the guidance and should not be taken as legal advice.

The guidance covers a number of topics about holidays and confirms HMRC’s previously stated position that taking holiday won’t break a period of furlough leave for the purposes of claiming the furlough subsidy. It is important to note that this may differ from the position taken in due course by Employment Tribunals.

The guidance makes some interesting points including:

Holiday entitlement

The guidance confirms the three different types of holiday but basically deals with the first 28 days or 5.6 weeks of holiday accrued p.a. (known as Working Time Regulations holiday) and confirms furloughed workers continue to accrue holiday.

Taking holiday during furlough leave

The guidance suggests that employers might be able to require workers to take holiday whilst on furlough leave or alternatively cancel an employee’s holiday.

Interestingly, it talks about workers and employers potentially agreeing whether or not holiday may be taken on a bank holiday day during furlough and that where taken correct holiday pay must be paid for days of holiday taken (see Holiday Pay below).

The guidance mentions that employees can take holiday during sick leave but should not be forced to take holiday during sick leave.  This raises an interesting question as to whether a similar approach might be taken by Employment Tribunals when considering the interplay between holidays and furlough leave. If this is the case then it may present some possible options for employers as to how to go about dealing with holidays for staff on furlough.

Holiday pay

Holiday pay during furlough leave needs to be paid at existing legal levels. This may vary of course depending on how many days or hours have been worked by the worker prior to being furloughed and whether their pay varies and how pay is made up i.e. of basic pay and overtime. This may be higher than the rate of furlough pay being received.

Holiday carry over

The 28 days a year basic holiday for a full time 5 day a week worker is split into 20 days “European derived” holiday and 8 days “U.K derived” holiday. Normally the 20 day element cannot be carried over except in very particular circumstances but the 8 days can be carried over with agreement. The Government made some emergency amendments to legislation a few weeks ago allowing the 20 day element of this year’s entitlement to be carried over for up to 2 years where it can’t “reasonably practicably” be taken in this holiday year due to Coronavirus.

The guidance sets out the kinds of things an employer should take into account when considering whether or not this 20 days might be carried over.

For more information about any of the issues in this article, please don’t hesitate to get in touch with or telephone 0114 228 3282 or any member of our multi-award winning team.

If you are worried your business has made mistake in the uptake and implementation of the coronavirus job retention scheme (CJRS) or are facing a potential Furlough Fraud investigation by HMRC, our team of specialist Furlough Fraud Lawyers can offer you tailored legal advice and specialist representation.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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