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Annual Leave Entitlement: Where Do You Stand If You Have Been Furloughed?

April 2020

Annual leave entitlement

The Working Time Regulations 1998 (the “Regulations”) provide that workers are entitled to 5.6 weeks’ paid annual leave per year (pro-rated for part time employees).  This is made up of a minimum of 20 days paid annual leave (Basic Leave) with a further 1.6 weeks as permitted under domestic legislation (in other words, bank holidays).  

Under the Regulation, workers must take their Basic Leave entitlement in the leave year in which it is due, otherwise the entitlement will be lost. The 1.6 weeks of additional leave can be carried forward into the next leave year if there is a “relevant agreement” (for example, where it is provided for in an employment contract or with the employer’s consent).  

Employers are under an obligation to give workers an effective opportunity to take holiday in the leave year in which it accrues and this is where COVID-19 is presenting some challenges.  

Changes made to the Regulations in the wake of the COVID-19 epidemic

The government has announced that the Regulations will be amended so that workers can carry over up to 4 weeks’ holiday into the next two holiday years.  This will only apply where, by the end of the year, it has not been “reasonably practicable for the worker to take some or all of their annual leave as a result of the effects of Coronavirus (including on the worker, the employer or the wider economy or society)”.

Employers can ask employees to take annual leave during a period of furlough

Under the Regulations an employer has the right to tell employees when to take annual leave.  

The guidance available from ACAS suggests that an employer could, for example, shut for a week and tell everyone to use their holiday entitlement.  The guidance goes on:

If the employer decides to do this, they must tell staff at least twice as many days before as the amount of days they need people to take.

For example, if they want to close for 5 days, they should tell everyone at least 10 days before.”

Complications will occur where an employee is unable to take annual leave – for example, in circumstances where they have contracted COVID-19.  The guidance on this gives three examples of where a worker “cannot take holiday due to coronavirus”, namely:

  1. the worker is self-isolating or is too sick to take holiday before the end of their leave year;
  2. they have been temporarily sent home as there is no work (‘laid off’ or ‘put on furlough’); or
  3. they have had to continue working and could not take paid holiday.

Where any of the above applies, employers will need to give serious consideration to carrying over holiday in accordance with the amended Regulations.

Employees can make requests for annual leave whilst on furlough

ACAS guidance is very clear on this.  It reads as follows: 

If an employee or worker is temporarily sent home because there’s no work and the employer intends to claim for their wages under the Coronavirus Job Retention Scheme (‘furloughed’), they can still request and take their holiday in the usual way. This includes bank holidays.

Employees and workers must get their usual pay in full, for any holidays they take”.

How this will affect people on furlough is currently unknown

The government guidance regarding furloughed employees more generally is that they will have the same rights as they did previously, suggesting that employees can continue to accrue annual leave whilst on furlough.  The extent to which companies can require staff to take annual leave whilst on furlough or the level of pay they would be entitled to whilst on furlough, is tricky to determine based on the guidance available so far.  

Add to this issues such as whether employers will still have to pay 100% of pay while their employees are on annual leave, whether the payment of annual leave entitlement will be reimbursed under the Coronavirus Job retention Scheme and whether annual leave would affect the 3 week minimum furlough period – you can see why employers are confused.

What we do know, is that this is an area in which employers will need to tread carefully and watch closely.