Late last week, the Government issued new explanatory guidance to clarify the inter-relationship between holiday and furlough leave (click here to read in full). The guidance is welcome for everyone (if a little late in the day) given holiday was the one area that previous Government guidance had omitted to cover. Following on from our previous briefings regarding the introduction and operation of the Government’s emergency Coronavirus Job Retention Scheme, we have prepared this summary on the new guidance.
The good news is that employers can now proceed with far greater confidence when it comes to managing staff holiday balances as part of their broader return to work plan. It is also helpful to know, for certain, how much employers should be paying staff when they take periods of holiday during furlough leave.
Key points arising from the latest guidance are:
- Annual leave and furlough can run concurrently – this means that workers on furlough leave can take (and be asked to take) holiday and this will not ‘break’ their period of furlough leave
- Employers can lawfully designate specific days or weeks that employees must take as holiday during furlough leave provided strict notice requirements are met. The employer must provide twice the amount of notice to the number of days to be taken. So, 10 working days’ advance notice if you want an employee to take 5 working days’ annual leave. This is a right which derives from the Working Time Regulations 1998 (it is nothing new) and is a right that employers can exercise not just in respect of furloughed staff, but can be used to manage (down) the holiday balances of non-furloughed staff too. The extra consideration in respect of furloughed staff is that employers must take into consideration their specific circumstances and whether they are capable of resting and relaxing during the period of enforced annual leave. For some (e.g. those who are clinically ‘extremely vulnerable’) it is arguable that this test would not be met and advice should be taken before looking to enforce periods of leave in respect of employees in these categories.
- Bank holidays are unaffected by furlough leave: if a furloughed employee would normally have been entitled to have a day off on a bank holiday, they can still do so (and be paid a day’s holiday) or that holiday day can be deferred to a later date.
- Holiday pay: furloughed employees should be paid their normal remuneration for periods of holiday just as they would if they had been at work. For employers who have furloughed employees on reduced pay to align with the grant (i.e. 80% of normal remuneration up to a maximum of £2,500), they will need to apply a ‘top-up’ to pay to ensure that the employee receives the correct amount of holiday pay. For employers wishing to conserve cash this ‘top-up’ will be an important consideration and could lead to requests for employees to cancel holidays (which is permissible) or refusing requests for leave. Conversely, employers who can afford to pay the ‘top-up’ may want to take full advantage of the Government effectively subsidising part of their holiday pay costs and look to reduce holiday balances as far as reasonable prior to an anticipated (and much hoped for) increase in productivity.
If you would like any further advice on the scheme and its operation, please contact us on 01904 437680 or email here.