The government has now published guidance on workers’ entitlement to holiday and holiday pay which helps to plug one the last main gaps in the guidance we have received to date. The guidance seeks to explain how holiday entitlement and pay operate during the COVID-19 pandemic. It addresses the position both of workers who continue to work and those who have been placed on furlough. The guidance has no legal effect, however, and tribunals will not be required to follow it when deciding working time and holiday pay cases, albeit they are likely to.
We already knew that furloughed workers continue to accrue entitlement to annual leave under the Working Time Regulations 1998 but the guidance confirms this. It also confirms that furloughed workers can take holiday without bringing the period of furlough to an end, again we already knew this.
Importantly it suggests that employers can require workers to take holiday while on furlough. It cautions however that ‘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’. The guidance therefore unfortunately does not give a clear view on whether holiday taken during furlough meets this definition.
As to holiday pay, the guidance states that holiday pay during furlough must be at full pay rates. It notes that where an employee is on furlough leave the employer will have to pay the difference but will still be able to claim up to 80% (or £2,500 per month) under the CJRS.
The guidance also covers the impact of the Working Time (Coronavirus) (Amendment) Regulations 2020, which came into effect on 26 March 2020. Under the Regulations, where it has not been reasonably practicable for a worker to take some or all of the basic four weeks’ annual leave due to the effects of coronavirus, the untaken amount may be carried forward into the following two leave years. The guidance indicates that, when considering whether it was not reasonably practicable for a worker to take leave, an employer should consider factors such as;
- Whether the business has faced a significant increase in demand due to coronavirus that would reasonably require the worker to continue to be at work and cannot be met through alternative practical measures;
- The extent to which the business’s workforce is disrupted by the coronavirus and the practical options available to the business to provide temporary cover of essential activities;
- The health of the worker and how soon he or she needs to take a period of rest and relaxation;
- The length of time remaining in the worker’s leave year, to enable the worker to take holiday at a later date within the leave year;
- The extent to which the worker taking leave would impact on wider society’s response to, and recovery from, the coronavirus situation; and
- The ability of the remainder of the available workforce to provide cover for the worker going on leave.
It notes that employers should do everything reasonably practicable to ensure that the worker is able to take as much of his or her leave as possible in the year to which it relates and that, where leave is carried forward, it is best practice to give workers the opportunity to take holiday at the earliest practicable opportunity.
As for furloughed workers, the guidance notes that they will be unlikely to need to carry forward statutory annual leave as they will be able to take it during the furlough period, so long as the employer pays the correct rate of holiday pay. However, if, due to the impact of coronavirus on operations, the employer is unable to fund the difference between furlough pay and holiday pay, this would be likely to make it not reasonably practicable for the worker to take the leave, enabling the worker to carry it forward under the Regulations.
It would be preferable for this guidance to be given legal force but it is very helpful and can be read in full here. Please do print this and store in your records if you choose to compel furloughed employees to take holiday whilst on furlough leave.
If you have any queries or concerns please do contact Gary Smith on 01279 712576 or via email firstname.lastname@example.org.