HOLIDAY ENTITLEMENT AND PAY DURING COVID-19

Published 22 May 2020

HOLIDAY ENTITLEMENT

Furloughed workers

​Workers on furlough can take holiday without disrupting their furlough. The notice requirements for employers requiring a worker to take leave or to refuse a request for leave continue to apply.

The employer should consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday.


BANK HOLIDAYS

There is no statutory right to time off for bank holidays. Employers can include bank holidays as part of a workers’ statutory holiday entitlement if they choose, but do not have to do so.

Where necessary, employers can require workers who would usually take bank holidays as holiday to work instead, using the standard notice periods. Employers must still ensure that the workers receive their statutory holiday entitlement for the year.

Furloughed workers

If an employee would have usually worked the bank holiday then their furlough will be unaffected by the bank holiday.

If the worker would have usually had the bank holiday as annual leave then there are 2 options:


1) The bank holiday is taken as annual leave
If the employer and the worker agree that the bank holiday can be taken as annual leave while on furlough, the employer must pay the correct holiday pay for the worker. Employers may also require workers to take the bank holiday as annual leave with the correct notice periods.

2) The bank holiday is deferred
If the employer and the worker agree that the bank holiday will not be taken as annual leave at that time, the worker must still receive the day of annual leave that they would have received. This holiday can be deferred to a later date, but the worker should still receive their full holiday entitlement.


HOLIDAY PAY

The amount of pay that a worker receives for the holiday they take depends on the number of hours they work and how they are paid for those hours. The principle is that pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work and working.

Holiday pay, whether the worker is on furlough or not, should be calculated in line with current legislation - see the standard guidance, based on a worker’s usual earnings. The underlying principle is that a worker should not be financially worse off through taking holiday.

Where a worker has regular hours and pay, their holiday pay would be calculated based on these hours. If they have variable hours or pay, their holiday pay is calculated as an average of the previous 52-weeks of remuneration excluding weeks in which there was no remuneration.

​Furloughed workers

An employer should not automatically pay a worker on holiday the rate of pay that they are receiving while on furlough, unless the employer has agreed to not reduce the worker’s pay while on furlough.

If a worker on furlough takes annual leave, an employer must calculate and pay the correct holiday pay in accordance with current legislation - see the standard guidance. If the calculated rate is above the pay the worker receives while on furlough then 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 from the government to cover most of the cost of holiday pay.


CARRYING ANNUAL LEAVE INTO FUTURE LEAVE YEARS

The 5.6 weeks of statutory holiday is split into 4 weeks and 1.6 weeks, and there are some differences in the rules that apply:

- the 1.6 weeks can be carried forward into the following leave year if a written agreement exists between the worker and the employer
- generally, the 4 weeks cannot be carried into future leave years, so employers must facilitate these weeks being taken within the relevant leave year

However under certain circumstances employers must allow the 4 weeks to be carried into future leave years. Where a worker cannot take annual leave due to them being on maternity leave or sick, employers must still allow workers to carry their annual leave forwards. These rights remain unaffected by a worker being furloughed.


CARRYING LEAVE FORWARDS: HOW NEW LEGISLATION HAS CHANGED THE RULES

The government has passed new emergency legislation to ensure businesses have the flexibility they need to respond to the coronavirus pandemic and to protect workers from losing their statutory holiday entitlement. These regulations enable workers to carry holiday forward where the impact of coronavirus means that it has not been reasonably practicable to take it in the leave year to which it relates.

Where it has not been reasonably practicable for the worker to take some or all of the 4 weeks’ holiday due to the effects of coronavirus, the untaken amount may be carried forward into the following 2 leave years. When calculating how much holiday a worker can carry forwards, employers must give workers the opportunity to take any leave that they cannot carry forward before the end of the leave year.

Furloughed workers

Workers who are on furlough are unlikely to need to carry forward statutory annual leave, as they will be able to take it during the furlough period. However, to do so they must be paid the correct holiday pay which is likely to be higher than the rate of pay that will be covered by government grants, with the employer making up the difference.

If the employer is unable to fund the difference due to the impact of coronavirus on operations, it is likely that this would make it not reasonably practicable for the worker to take their leave, enabling the worker to carry their annual leave forwards.


HANDLING LEAVE THAT HAS BEEN CARRIED FORWARD

When a worker carries leave forwards due to the coronavirus, they will continue to accrue holiday in the next leave year. As such, they will have 2 entitlements:

- the holiday that has been carried forward that must be taken in the next 2 leave years
- the entitlement that relates to the new leave year