It is an established position, as we previously explained, that the annual leave entitlement continues to accrue on furlough. This may put business in a difficult position once the furlough ends and the employees rush to use up their accumulated entitlement.
This also means that if there is not enough work and an employee is made redundant at the end of furlough, the business will have to include into the redundancy package a payment for the unused leave.
The rules against carrying over unused leave have been relaxed by The Working Time (Coronavirus) (Amendment) Regulations 2020. In relation to the statutory entitlement to 4 weeks for full-time staff (out of the 5.6 weeks’ total statutory minimum), a worker may carry over accrued leave if it was not reasonably practical for this worker to take some or all of the leave in any leave as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society). The carried over leave must be taken within next two lave years. With good reason, the employer may refuse the worker to take the carried over leave on requested days.
It is possible to request employees to take holidays during furlough, as is reflected in the publicised guidance, provided the employer considers ‘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’.
The 80% (up to £2,500 cap) of holiday pay can be claimed through the Coronavirus Job Retention Scheme but the employer will have to pay the usual holiday pay and top up the furlough money.
If the employer requests staff to take holidays, a minimum notice of twice the length of the requested holidays must be served. For example, the employer has to serve a notice of minimum of 10 days requiring the worker to take 5 days of leave.
In respect of the bank holidays falling within a period of furlough, which normally would be taken as time off, there are two options: defer the holiday until the end of furlough or treat the holiday as annual leave and top up the furlough pay accordingly. Bank holidays do not interrupt furlough.
Below is a suggested template an employer can use to request staff to take holidays while on furlough:
RE: Notice to Take Annual Leave
We write to confirm your entitlement to annual leave continues to accrue in the furlough period.
To abate the impact of the coronavirus on the business of the company, you are required to take the period from [DATE] to [DATE], [NUMBER weeks/days] in total, as part of your annual leave. This period of leave will be deducted from your remaining annual leave entitlement for the current holiday year.
You will remain away from work and your furlough will continue uninterrupted on the stated leave days.
The company considers that the current furlough period does not reasonably prevent you from utilising the requested leave to take rest from your work.
For the stated days of leave, the reduced furlough rate will not apply, instead you will receive your normal holiday pay in the normal pay cycle.
If you wish to discuss any aspect of this letter, please contact me on [CONTACT DETAILS].