15 May 2020
The new normal: Taking annual leave while furloughed
The Government has confirmed that employers can ask staff to take and cancel holiday while they are on furlough, as long as sufficient notice is given.
In addition, the Department for Business, Energy and Industrial Strategy (BEIS) has confirmed that employees on furlough can take holiday without breaking up the minimum three-week furlough period.
The notice requirements for employers asking a member of staff to take or cancel holiday remain the same as usual. Employers need to give notice of at least twice the length of the proposed holiday they wish to require their staff to take as holiday. So, if an employer wants a member of staff to take a week’s holiday, it needs to give that employee two weeks’ notice. If an employer wants a member of staff to cancel holiday, they need to give notice equivalent to the length of the planned holiday (so a week’s notice to cancel a week’s holiday). BEIS has also said that employers should explain their reasons for wanting staff to take leave before requiring them to do so.
Similarly, agency workers continue to accumulate holiday on furlough as they would when between assignments. The BEIS guidance says:
“Where a furloughed agency worker takes holiday, the employer who has placed the agency worker on to furlough may continue to claim the grant from HMRC. The grant can cover up to 80% of the worker’s wage cost, with the employer liable for holiday pay above this figure.”
The Government also passed emergency legislation, the Working Time (Coronavirus) (Amendment) Regulations 2020, in March 2020 to avoid workers losing their statutory holiday entitlement. The regulations enable workers to carry holiday forward where the impact of Covid-19 means that it has not been ‘reasonably practicable’ to take it in the leave year to which it relates.
When working out how much holiday a worker can carry forward, employers must give workers the opportunity to take any holiday that they cannot carry forward before the end of the leave year. Notably, however, the new guidance states that, because workers who are on furlough can take holiday during their furlough period, it is unlikely that it wouldn’t have been reasonably practicable for them to carry it forward.
Other key developments
The Coronavirus Job Retention Scheme has been extended in its current form until 31 July 2020. From 1 August 2020 until 31 October 2020, a different scheme will be implemented. .
The Government is planning to release further details of the replacement scheme to by the end of May 2020.
Although full details of the replacement scheme are awaited, it appears that from 1 August 2020, employers will be able to bring employees currently on furlough back on a part-time basis. It also appears that the level of Government support will decrease and that employers will be required to make a contribution towards the salaries of their furloughed staff. Despite the decrease in the Government’s contribution to their salaries, the Chancellor believes that under the replacement scheme employees should continue to receive 80% of their current wages, up to £2,500 a month.