By Louise Walker, Associate Director.
In our previous client updates, we have addressed frequently asked questions surrounding annual leave during the coronavirus pandemic.
It has been clear for some time that:
- An employee who has pre-arranged annual leave can take that annual leave whether they remain at work or are on furlough;
- An employee will continue to accrue annual leave during the coronavirus pandemic whether they are at work or on furlough; and
- An employer can compel an employee to take annual leave where they remain at work (subject to the statutory provisions and the terms of the worker’s contract).
It has been less clear, however, whether an employer can compel an employee to take annual leave during furlough.
Government guidance has now been published online which clarifies the position in respect of this point to some degree. The guidance outlines precisely how holiday entitlement and pay are intended to operate during the coronavirus pandemic. In relation to whether an employer can compel an employee to take annual leave during furlough, the guidance states that in principle, this can be done, subject to the employee being given the required notice in advance. Subject to any particular terms of the employee’s contract, the required notice period is double the length of the holiday that the employer wishes the employee to take. By way of an example, an employer requiring an employee to take one week’s holiday would require to give two weeks’ notice in advance.
The guidance goes on to say, however, that where an employer requires an employee to take holiday while on furlough, the employer should consider whether any restrictions the employee is under, such as the need to socially distance or self-isolate, would prevent the employee from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday. As such, whilst the government’s view is that employers can require holidays to be taken during furlough, an employer requiring an employee to take a significant portion of their annual entitlement during ‘lockdown’ (and particularly the more rigid version of ‘lockdown’ currently in place), could still face a challenge by way of an employment tribunal claim that they have not had the opportunity to enjoy their holiday. It is important to note that the government guidance, while persuasive, would not be binding on an employment tribunal.
Holiday pay, whether the employee is on furlough or not, must be calculated in line with current legislation, based on an employee’s usual earnings. An employer making furlough payments of less than an employee’s usual earnings will therefore be required to ‘top up’ furlough pay for any periods of holiday. However, as taking holiday does not break the furlough period, the employer can continue to claim the normal allowance (80% up to £2,500) via the Coronavirus Job Retention Scheme, to cover most of the cost of holiday pay.
We have previously reported that the government has passed legislation enabling employees to carry holiday forward four weeks’ holiday where the impact of coronavirus means that it has not been reasonably practicable to take it in the leave year to which it relates. The guidance clarifies circumstances in which the need to carry over holiday may arise and, helpfully, notes that employees on furlough are unlikely to need to carry forward statutory annual leave, as they will, in most cases, be able to take it during the furlough period. The guidance goes on to say, however that if, due to the impact of coronavirus on operations, the employer is unable to fund the difference between the furlough payment and ‘full’ holiday pay, then it is likely that this would make it not reasonably practicable for the employee to take their leave, thus enabling the worker to carry their annual leave forward. So, in short, an employer who only pays minimum furlough pay to a furloughed employee for a ‘holiday’ period may find that the employee is legally entitled to take (and be paid for) that period of holiday again at some point in the future.
Holiday rights are always subject to the terms of individual employment contracts, where more generous, and employers may wish to seek legal advice if they have any queries regarding a particular employee’s circumstances.
If you have any questions around annual leave or furlough, or if you have any other employment law queries, please don’t hesitate to contact a member of the team on 0141 331 5150.