11 May Can annual leave be taken during furlough?
This is a question we are being asked repeatedly and unfortunately there is no simple answer however, the latest guidance is summarised below.
Government guidance confirms employees/workers may take annual leave during furlough although, we understand that employers may need employees defer taking annual leave because:
- they will be entitled to their normal full holiday pay during annual leave days; and
- employers must pay that ‘top up’ in full holiday pay over the 80% / £2,500 furlough cap.
Can an employer force holiday to be taken whilst on furlough?
Employers could seek to take advantage of the fact that the guidance now states that employers can indeed recoup (80%/capped) employee holiday pay from the Government Job Retention Scheme (GJRS).
In that case some employers may seek to save costs in difficult times now, by directing staff to take annual leave on the requisite notice during furlough.
However, if employees/workers don’t want to take holiday, it may be reasonable for them to contend that ‘lockdown’ and furlough place them in the same position as those who are self-isolating i.e. it is not possible to enjoy rest and relaxation – they could then argue they don’t have to take holiday (see below for more details). Therefore, employers need to be careful if they find they have to force holiday during this period, it could create claims.
Can employers force workers to take accrued holiday after furlough ends?
Employers can possibly require annual leave to be taken and designate periods to take it based on business needs, yes, if they give proper notice under the Working Time Regulations and in accordance with contracts and holiday policies too; BUT it all depends too on the employee/worker’s circumstances, both in lockdown generally and in particular their own situation – can they really take meaningful holiday during this period?
There are many scenarios where employees or workers could argue that forcing holiday is simply not reasonable or indeed possible in their case and thus, could amount to a breach of the employer’s obligations under the Working Time Regulations.
For example, say they are shielding or still having to care for a close family member or children, or even isolating to protect themselves or family – how could they reasonably take meaningful leave then?
In that case, we would caution forcing holiday upon them. However, if furlough is coming to an end and/or being relaxed, you may then be able to force leave as relaxation, but it will always depend on the individual’s circumstances.
We also have to bear in mind that we don’t know whether or not an employee/worker can simply refuse based on the carry over amendment rules to the Working Time Regulations which are:
Regulation 13(10) of the WTR 1998…………[leave can be carried forward if it was not reasonably practicable to take it in the leave year] “as a result of the effects of the coronavirus (including on the worker, the employer or the wider economy or society)’
Could employees use regulation 13 to reject holiday i.e. ‘I am permitted to carry over to later’?
Employees/workers don’t normally have a right to reject a compliant request / notice to take leave BUT do the present circumstances and reg 13 allow them to do so on the basis they can’t take any meaningful leave and now need to carry it over?
Combine this with the fact that many employees/workers will likely argue they do not get a “benefit” from any annual leave due to the restrictions on movement then there is certainly a legal case that remains unresolved on this point.
In our view, it seems possible employees / workers have two reasonable arguments for not having to take leave whilst on furlough.
Can employers stop workers from taking annual leave whilst on furlough?
Yes you may do this, whilst government guidance has made clear that employees can take annual leave during furlough and only if they give the required notice to do so; it is also then viable for an employer to designate furlough as a period during which no annual leave may be taken or indeed to actually give a compliant counter-notice to a request to take leave at full pay, thus, refusing the holiday request.
What pay is a worker entitled to where they take annual leave during furlough?
In short they should be paid their usual holiday pay.
The government guidance states holiday taken during furlough should be paid in accordance with the WTR i.e. in the normal way.
It also makes very clear that employers can only recover the 80% / £2,500 cap from the government scheme for annual leave taken whilst on furlough.
Thus, in basic terms, the employer must make up the 20% (or excess over the cap etc.).
What happens where a worker has pre-arranged annual leave during furlough?
As discussed already, they could:
- cancel their leave in certain circumstances; or
- you may implement a policy of no leave and use a counter notice if appropriate to confirm that (perhaps where you don’t want to top up to full pay for leave); and
- then apply a blanket carry over of leave if required where they can’t take it; and
- seek to manage excess leave during designated leave / quiet periods – that is something to consider consulting on now, prior to furlough with a proposed time table to spread leave across the rest of the year or into next year to ease costs and pressure on work capacity too.
Can an employer refuse withdrawal of leave to be taken by an employee on furlough?
Again, we think to do so may put you at risk of creating a breach of contract, the circumstances for the reasons noted at the start of this update would need to be looked at carefully first, it just isn’t clear whether or not employers are able to require workers to take their annual leave whilst on furlough, each case must be assessed on an individual basis in our view, if you want to close all risks down.
What about bank holidays that fall in furlough?
If it is then not reasonably practicable for cancelled annual leave to be taken later in the leave year, and if bank holidays are included within the employee’s/workers statutory leave entitlement, then we recommend – at the time of writing this update – that, unless specifically agreed with the employee, as leave, then this holiday should be carried forward – and certainly not forced to be taken on furlough.
If, however, the employer wanted to treat any such bank holidays during furlough as statutory annual leave, then you must ensure you pay full pay for the holiday (see above).
If the employee usually has a bank holiday off, then you’ll need to either top up their pay to their usual holiday pay or give the employee a day off in lieu.
Also, do bear in mind that the Government guidance makes very clear that where employees usually work bank holidays, then you may agree that this is included in the government job retention scheme payments.
As noted, it depends on each case, the terms, the personal situation, what is agreed and/or included in holiday and pay and their terms as to whether it can / must be taken or indeed can’t be taken and as to how it should be paid when it is taken.
We appreciate this is not always clear, we’re here to help so do please call or e-mail to team:
tel: 01904 360 295