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Government explains how holiday entitlement and pay operates during Covid-19

The government has published guidance on holiday entitlement and pay during coronavirus (Covid-19) and it includes sections on furloughed staff and deferring holiday into another holiday year.

It's worth remembering that this is guidance not law and, if there's a dispute between you and your staff about holiday scheduling, entitlement or pay, the employment tribunal will determine the issue. 

Paid holiday - statutory minimum

The guidance starts by reiterating the law on paid holiday - ie; all workers are entitled to 5.6 weeks paid holiday each year. Employers can use the newly reinstated government holiday calculator to work out the statutory entitlement of those working part-time, shift patterns and those who start or leave part way through a leave year.

Taking holiday

It then goes to explain the steps employers must take if they want their staff to take holiday on particular dates. Generally this requires notice and statutory minimum periods apply unless the contract says otherwise.

So far, so good. There's nothing controversial about these two sections.

Furloughed staff

The guidance confirms what it (eventually) told business in its employee guidance: Check if your employer can use the Coronavirus Job Retention Scheme - that is - workers can take holiday without disrupting their furlough. Our blog explains this in more detail.

Bank holidays can be taken as annual leave or deferred and employers can ask staff on furlough to take leave during the current leave year. However, it goes on to say:

'If an employer requires a worker to take holiday while on furlough, 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.'  

That's a nod to the fact that the ECJ and our domestic courts have held that the purpose of holiday is for relaxation and leisure and to give workers a break from work. The government is therefore hedging its bets - telling employers that they can ask furloughed staff to take holiday on the one hand whilst reminding them of its purpose. We discussed this here under the section: Can staff cancel holiday and elect to take it when holiday destinations re-open? It may also be possible to argue that now most people are able to take as much outdoor exercise as they want to (and travel to do so) they can still enjoy relaxation whilst sicking to social distancing rules.

In terms of pay, the guidance correctly states that employers should pay staff their usual earnings and must top up furlough pay to meet these. Our views on calculating holiday pay for furloughed staff are available here

Carrying annual leave into future leave years

The 5.6 weeks of statutory holiday is split into four 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 four weeks cannot be carried into future leave years, so employers must facilitate these weeks being taken within the relevant leave year.

However, as we explained here, if it's not 'reasonably practicable' for a worker to take some or all of their four weeks holiday due to the effects of coronavirus, they can carry over the untaken amount into the following two leave years. 

This guidance provides some examples of when it might not be 'reasonably practicable' for someone to take holiday and is worth a read. In particular, it suggests that not being able to top up furlough pay, means it's not 'reasonably practicable' for a worker to take leave.  

Agency workers

The guidance helpfully clarifies that agency workers will only accrue holiday during furlough if they have a contract of employment or their contractual terms otherwise provide for this. Most will be engaged as workers and will only accrue holidays during any assignments. 

Need advice about holiday pay, accrual or carry over?

Please contact Glenn Hayes if you have any queries about holiday pay, which remains a complicated issue for many employers.

Our Coronavirus updates

We're working hard to keep you up to date with legal developments around Coronavirus. We've set up a portal which includes lots of helpful articles and advice to help you.

If you have a query, that we haven't answered, please contact us.