I’ve had lots of enquiries about annual leave and how it all works for those on furlough leave.  The guidance is silent on this, and it’s complex and every changing (like the last update!) Something important to note first off:  The 5.6 weeks statutory holiday is made up of:

• 4 weeks – EU law
• Additional 1.6 weeks – UK Law (essentially the 8 bank holidays)
• Yes, annual leave does continue to accrue during furlough leave! So think about that if you are taking employees back who have left to furlough them!
• Carrying over leave to the next holiday year. Usually, in most situations, workers should use their paid holiday (‘statutory annual leave’) in the current leave year. This is 5.6 weeks in the UK (see above). However, during this outbreak it may not be possible to use all annual leave in the current holiday year and therefore the Government has confirmed that workers will be able to carry over up to 4 weeks’ paid holiday over a 2-year period. Note that this applies to, for example:
  1. self-isolating or sick workers who cannot all their annual leave before the end of their leave year
  2. those who are on furlough leave
  3. workers who have had to continue working e.g. key workers, and could not take paid holiday

Check your contracts for:

• how bank holidays are dealt with – do you pay these or are employees expected to work?
• If you can decide how any additional leave in excess of the 5.6 weeks is dealt with – e.g. if you allow this to be carried over.
• Can holidays be taken during Furlough leave?

If an employee is ‘furloughed’ (temporarily sent home because there’s no work), they can still request and take their holiday in the usual way. This includes taking bank holidays. For those with pre-booked holidays, employers may still tell them to take the time off, even if they have requested the time is cancelled. If a worker wants to change when they take time off, they’ll need to get agreement from their employer in the normal way. Note – Employers should still be encouraging employees to take their holiday leave, following your usual process for requesting leave. It’s not clear whether this holiday period can be claimed for under the Job Retention Scheme, or whether it breaks the ‘three week period’ rule.  I’ll keep you updated.

• Can I ask my workers to take holiday?

Yes, as long as the notice you give them is at least twice the length of the leave e.g. two weeks’ notice for a period of annual leave of one week. You might want to do this to use up some or all of the outstanding leave to reduce the amount of leave taken when work resumes – imagine all those holiday requests next year!

• Calculating holiday pay

Do remember that holiday should be calculated not on basic pay – Take the average rate over the last 52 weeks (from April 2020 – was based on 12 weeks previously), at least for the first four weeks of leave (as this is based on normal remuneration).  It’s not clear whether these payments should be made at 100% or at 80% currently! The whole thing is quite complex so I would suggest that if you have specific questions relating to holiday you drop me a line with the specifics so that I can look into it for you. In any event, make sure you communicate regularly with your workers, including what you decide to do for annual leave.