Holiday entitlement and pay during Coronavirus

Holiday entitlement and pay during Coronavirus

On 13th May 2020, the Government published guidance on holiday entitlement and pay during the Covid-19 pandemic.

The new guidance provides employers with information on how holiday entitlement and pay operates during this time, particularly in respect of employees placed on furlough leave. Although useful, it is important to remember that the guidance reflects the Government’s views but is not legally binding and so may be open to challenge in the months ahead.   

A lot of information is being circulated about Coronavirus, which can make it difficult for employers and employees to navigate and keep up to date with the most appropriate information. Here we have outlined some of the main points in the form of a simple Q&A.

How much statutory holiday are employees entitled to?

Employees are legally entitled to 5.6 weeks’ paid holiday per year. This equates to 28 days for an employee working 5 days or more each week. This holiday consists of 4 weeks’ entitlement from EU law and 1.6 weeks under UK law. Employees accrue holiday entitlement from the day they start working but can be limited to only taking the holiday they have accrued during the first year of employment.

Are Furloughed workers still accruing holiday?

Yes. The Government guidance states that workers on furlough leave will continue to accrue statutory holiday.

Can furloughed workers still take holiday? 

Yes, furloughed workers can request to take holidays without disrupting their furlough leave. This may be encouraged by employers to prevent employees accruing large amounts of leave and asking to take holiday at the same time later in the year. Taking their statutory holiday will also boost the employees’ pay as they will receive 100% for their holiday pay, compared to 80% furlough pay.

Can an employer cancel or require an employee to take holiday?

Under the Working Time Regulations, an employer is entitled to require an employee to take a holiday or to cancel an employee’s existing holiday, as long as they give sufficient notice.

The required notice periods are:

  1. Double the length of the holiday if the employer wishes to require a worker to take holiday on particular days.
  2. The equivalent length of the planned holiday if the employer wishes to cancel a worker’s holiday or require the worker not to take holiday on particular dates.

The above can be varied or amended by the employer and employee under the terms of a written agreement.  

Imposing or changing holiday requirements can be unpopular, therefore employers should clearly explain the reasons why they are making the requests or changes to an individual’s holiday. Employers must also consider whether the employee is subject to any restrictions, such as social distancing or self-isolation, which means the employee will be unable to relax, which is the main purpose of the holiday.

Do bank holidays affect furlough leave?

If a bank holiday falls within an employee’s furlough leave and they would have usually worked the bank holiday then the furlough leave is unaffected.

However, if the employee would usually have had the bank holiday as annual leave the parties can agree that either:

  1. The bank holiday is taken as annual leave – the employer must pay the employee the correct holiday pay. The employer can also require the employee to take the bank holiday as annual leave, as long as the correct notice periods are followed.
  • The bank holiday is deferred – if the bank holiday is not taken off as annual leave then the worker must still receive that day off at a later date.

How will holiday pay work?

Broadly speaking, the pay received by an employee while on holiday should reflect what they would have earned if they had been at work. This means that a furloughed employee should be paid at their usual rate of pay for any time spent on holiday. This means that, for those employees receiving 80% of their pay on furlough, their employer must ‘top up’ the difference to ensure the employee receives 100% holiday pay. The employer will still be able to claim the 80% under the Coronavirus Job Retention Scheme.

Can employees carry holiday entitlement into future years?

Emergency legislation passed by the Government enables workers to carry accrued but untaken holiday forward (capped at 4 weeks) for up to 2 years, where the impact of Coronavirus means that it has not been reasonably practicable to take it in the leave year to which it relates.

When considering what is ‘reasonably practical’ employers must consider:

  • Whether the business has faced a significant increase in demand due to Covid-19, meaning the employee could not take their annual leave.
  • The disruption to the workforce due to Covid-19 and the practical options available to the business to provide temporary cover of essential activities.
  • The health of the worker and if they need to take off a period of rest and relaxation.
  • The length of time remaining in the worker’s leave.
  • How would the workers leave impact the wider society’s response to, and recover from Covid-19?
  • Whether the rest of the workforce could provide cover for the worker going on leave.

Where leave is carried over, the employee will continue to accrue holiday the following year, in addition to their carried over leave.

Arguably, furloughed workers will not need to carry their holiday over as they will be able to take it while on furlough leave. However, if, due to the impact of Coronavirus on operations, the employer is unable to fund the difference, it is likely that this would meet the ‘reasonably practicable’ test, enabling the worker to carry forward their annual leave.

An employer must facilitate the worker taking their annual leave and not replace it with a financial payment (known as payment in lieu). However, if the employee leaves the company, the employer must pay the worker for any accrued but untaken holiday, including leave carried over under the emergency Coronavirus legislation.

How Blaser Mills Law can help your business

We have been and continue to advise businesses on their employment and HR strategy and planning.

If you would like further information on holiday pay or entitlement, or if you would like a video call with one of our employment lawyers, please contact James Simpson, Head of Employment, on 01494 478689 or at jfs@blasermills.co.uk