What happens to employees annual leave accruing during furlough?

One of the concerns of employers is the fact that during this period when many employees are furloughed or working from home, is that annual leave is accruing.  The fear is that when employees return to work they will have built up significant amounts of leave and it will be difficult to release people to use the leave at a time when businesses will be trying to build up their work.

The rules have been changed and now employers can ask workers to take or cancel holiday.  Employers must give the required notice period if they wish employees to take or cancel leave during furlough which is double the length of the holiday; so if an employer wished an employee to take one weeks’ holiday then they must give two weeks’ notice of the requirement.  Employers can ask employees to take or cancel holiday with less notice but need the employee’s agreement to do so.

Employees on furlough can take holiday without disrupting their furlough, if an employee is on holiday employers must calculate and pay the correct holiday pay in accordance with current legislation, if this figure is higher than the employee receives whilst on furlough the employer must pay the difference.  However, as taking holiday does not break the furlough period the employer can continue to claim the 80% grant to cover most, if not all, of the cost of holiday pay.

Where an employer require an employee to take holiday whilst on furlough the employer should consider whether any restrictions the employee is under would prevent the employee from resting and relaxing which is the fundamental purpose of holiday.

There has been a change to the rules for carrying leave forward which are a bit complicated!!  The annual leave entitlement for a full time worker is 5.6 weeks per year made up of 4 weeks statutory leave and 1.6 weeks made up of the 8 days Bank Holiday entitlement.  There is no entitlement to take the Bank Holiday days on the actual bank holidays but where they are not taken then, the days are added to their whole entitlement to be taken at some other time.  Under the change of rules the 4 weeks (20 days) can now be carried forward for up to two years.  However, there has been no change to the situation with the 8 days which have always been able to be carried forward for one year and that has not changed.  Some Contracts of Employment may carry restrictions on carry forward but in these unprecedented times employers should be more accommodating on this issue where the taking of holiday time has been prevented due to Coronavirus.  In addition, where a company’s leave allowance exceeds the statutory, the additional days could be ‘paid off’; this would require the employee’s agreement.  Statutory leave (5.6 weeks) cannot be ‘paid off’ and it is illegal to do so.

Any confusion around this (which I’m sure there will be!) please contact QHR Solutions who will be happy to sort it out for you and your particular circumstances.