Furlough extension to October 2020 and guidance on holidays/annual leave: Update 5

2020-05-16 Jennifer Renney-Butland posted:

Covid19 update5

Here is our guidance on recent developments, accurate as at 14th May 2020.

As you may be aware, Rishi Sunak has announced the Coronavirus Job Retention Scheme will be extended for 4 months, until the end of October 2020. Until the end of July, there are no changes. From August to October 2020, the scheme continues on the basis that furloughed employees can be brought back part-time.  Full details will be published by the end of May and I will keep you posted.

Many of our clients have been asking me whether staff are continuing to accrue holiday leave whilst furloughed, whether you can require staff to take annual leave whilst on furlough leave, and if so how much they should be paid.

Thankfully, on 13th May 2020 the Department for Business, Energy and Industrial Strategy published guidance on workers’ ‘Holiday entitlement and pay during coronavirus (COVID-19)’ which sets out how holiday entitlement and pay operate during the COVID-19 pandemic. It addresses the position both of workers who continue to work and those who have been placed on furlough under the Coronavirus Job Retention Scheme (CJRS).

The guidance confirms that furloughed workers continue to accrue holiday leave, and that they can take holiday without bringing the period of furlough to an end. It suggests that employers can require workers to take holiday while on furlough but states that ‘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’. Therefore the guidance, somewhat unhelpfully, does not give a clear view on whether holiday taken during furlough meets the definition of annual leave, and this is something you as an employer will need to consider, and I recommend that you document your considerations. As to holiday pay, the guidance states that holiday pay during furlough must be ‘the correct holiday pay in accordance with current legislation’, ie based on normal full pay/remuneration. So if the furloughed worker is receiving less than full pay, the employer will need to top this up to full pay but will still be able to claim the appropriate amount from HMRC (currently as at 13.05.20 up to 80% or £2,500 per month under the job retention scheme.)

However the guidance does state that furloughed workers will be unlikely to need to carry forward statutory annual leave as they will be able to take it during the furlough period, so long as the employer pays the correct rate of holiday pay. We need to bear in mind that this is guidance and the employment tribunals are not bound by it.

The guidance also covers the impact of the Working Time (Coronavirus) (Amendment) Regulations 2020, which came into effect on 26 March 2020. Under the Regulations, where it has not been “reasonably practicable” for a worker to take some or all of the basic four weeks’ annual leave due to the effects of coronavirus, the untaken amount may be carried forward into the following 2 leave years. It notes that employers should do everything “reasonably practicable” to ensure that the worker is able to take as much of his or her leave as possible in the year to which it relates and that, where leave is carried forward, it is best practice to give workers the opportunity to take holiday at the earliest “reasonably practicable” opportunity.

If an employer considers that it is not practical to allow a worker to take leave, they should consider factors such as (i) whether the business has faced a significant increase in demand due to coronavirus that requires the worker to continue to be at work and cannot be met through alternative practical measures; (ii) the extent to which the business’s workforce is disrupted by the coronavirus and the options available to the business to provide temporary cover of essential activities; (iii) the worker’s health and how soon he or she needs to take a period of rest and relaxation; (iv) the length of time remaining in the worker’s leave year, to enable the worker to take holiday at a later date within the leave year; (v) the extent to which the worker taking leave would impact on wider society’s response to, and recovery from, the coronavirus situation; and (vi) the ability of the remainder of the available workforce to provide cover for the worker going on leave.

Please feel free to contact us if you need help with any of these issues. You can email us at info@renneyandco.com with any questions.

Share this post

Sign Up to Our Newsletter

Share this post


And we're out with update 5 - read on for guidance on updates to the furlough scheme and how holiday/annual leave htwitter.com/i/web/status/1…mg


There have been some developments on the job retention scheme (the furlough scheme), which has now been extended totwitter.com/i/web/status/1…YB


With changes happening on a daily basis due to #COVID19 I've had lots of questions from both employers and employeetwitter.com/i/web/status/1…Nm


Thanks for all your advice and help in getting my settlement agreement processed quickly.

Client on 2nd April 2015


Thank you for all your advice and help in getting this processed quickly.

Private Client on 2nd April 2015