Apr 17

Furlough, annual leave….and how it all fits together!


One of the ongoing concerns for employers during the COVID-19 crisis is that if and when we return to ‘normal’ in the latter half of the year there is the potential for employees to perhaps have a whole year’s holiday to take in the final six months of 2020 when employers are, quite rightly, keen to try and rebuild their businesses.

To assist, I will hopefully answer some of the FAQs that I am regularly asked:

Does holiday accrue during furlough leave?

Yes – during furlough leave “employees still have the same rights at work” which includes the accrual of holidays. There is an argument for saying that only the statutory minimum holidays will accrue, rather than any enhanced contractual holiday, but I believe goodwill may be lost and there are bigger battles to fight!

Can employees take holiday whilst on furlough leave?

Yes – if an employee is furloughed they can still request and take their holiday in the usual way. Taking holiday does not break the continuity of furlough leave.

Can employers request that employees take holiday during furlough leave?

Yes – provided the employer gives twice the notice for the holiday it wants the employee to take – for example, if an employer wants an employee to take a week’s holiday during furlough they would need to give that employee two weeks’ notice.

It is worth remembering that, whilst it is reasonable for employers to request staff take some annual leave during furlough, the purpose of holiday is for the employee to enjoy rest and leisure – at this time, for many, this is simply not possible. If employers try to ask that all an employee’s holiday is used during furlough leave, this could be an abuse of the employer’s powers.

Can employers refuse holiday requests for employees on furlough?

It depends on the employer and the business sector in which they are operating. Some may want their employees to take holiday to avoid it being “stored-up” to a time when they want their employees to be working. Others will not. It is important to be consistent and fair in how you apply your policies and rules.

What happens with bank holidays (there are four during the furlough scheme)?

If your contract of employment stipulates that bank holidays are part of the annual holiday entitlement, then employees should be paid at their ‘normal rate of pay,’ rather than the reduced furlough pay, for that bank holiday.

If staff, currently furloughed, usually work bank holidays, then employers need to decide whether either the employee takes that day as holiday and is paid their normal pay or they take the time off at a later date.

Can employees cancel pre-booked holiday?

That is for the employer to decide. If an employee can no longer enjoy their holiday because they are at home, looking after/schooling children then perhaps allowing holiday to be taken at a later date or carried over would be recommended. However, an employer may want to ensure that pre-booked holiday is taken at this time to avoid the issues outlined already of a significant amount of holiday accumulating for many staff who may struggle to take it all during 2020 – albeit see below for revised carryover provision – and so insist that the holiday is still taken.

Can the employer cancel an employee’s pre-booked holiday?

Yes – an employer must give staff at least the same number of days’ notice as the original holiday request. As any sort of travel is banned at the moment, the employee may appreciate being able to take the holiday at another point in time.

What are employees paid if they take holiday during furlough?

Employees who take holiday during furlough leave are paid their ‘normal’ pre-furlough leave pay for the annual leave taken. This is a neat way of ensuring that holiday is not stored up and staff get a boost to their furloughed income (if their employer is only paying 80% of salaries). However, it does of course presume that the employer has the cashflow to manage this.

New rules on carryover?

If the employee is prevented from taking holiday because of coronavirus, they are now allowed to carry over 20 days for 2 holiday years after the end of their current holiday year. It is still reasonable, and advisable, to request some holiday is taken during furlough leave because a carryover of 20 days is going to be potentially difficult for the employer to manage as they try to rebuild their business. However, it is reassuring to know that the law has been relaxed for 2 years post COVID-19.

What about other holiday in excess of 20 days that has not been taken?

Some contracts of employment will allow for carryover. However, if not, it is down to the employer to decide whether to allow additional holiday to be carried over or not. Either way it is important that the employer is consistent in its approach and fair to all staff.

For further advice please email: nicola.goodridge@goodhr.co.uk or telephone: +44(0)7917 878384