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Furloughing and Annual Leave

So, with much of the population now furloughed, everything seems to have settled down somewhat and all the major confusion regarding the Government Corona Virus Job Retention Scheme appears to be resolved, or is it?

Well, kind of, until we hit a bank holiday weekend, much like this one. Countless calls this week have centred on annual leave, in particular the bank holidays during a furlough period, of which there could be 4 from now until the end of May.

We are currently awaiting clarity from the Government on the matter of annual leave and how it interfaces with furlough leave, in the meantime, NucleusHR are about to try and put a little sunshine to the shades of doubt.

Do holidays accrue throughout a furlough period?

It is clear that employees continue to accrue annual leave throughout a period furlough. Currently, there is no relaxation of the Working Time Regulations that prevents the accrual of annual leave throughout a period of lay-off or furlough.

Can employees book and take holidays throughout a furlough period?

This is where the confusion starts to creep in, technically, an employee can take annual leave subject to the usual requests and approval.

Many are confused as to why an employee would request a period of annual leave whilst receiving 80% of their pay when furloughed. Well, essentially, the cap of £2,500 applies and if they are not getting that topped up to 100% by the employer, they could be financially impacted. However, annual leave would attract full pay for the approved period, which may make it attractive to some employees.

However, if a furloughed worker takes a period of annual leave, they are no longer on furlough leave, they are on annual leave, which could be viewed as a break of the continuity of the furlough, which at the moment, needs to be for a period of 3 weeks. The question that employers ask, is if the annual leave breaks the furlough, could this mean that my claim for reimbursement could be denied on technical grounds?

This is a point that the Government are looking to clarify prior to the 30th April, early indications from the treasury are that employees can take annual leave and remain furloughed.

However, please be mindful, that this point is yet to be clarified by the Government, so apply caution to this point.

Can we enforce annual leave throughout a furlough period, or once the furlough has finished?

Subject to the Government clarification referred to above, you could enforce a period of annual leave, although it assists to have a contractual provision to do so.

The default position under the Working Time Directive is that you need to issue notice which is twice the amount of time that you would like the employee to take. Therefore, if you are requiring the employee to take 5 days leave, you will be required to give 10 days notice. Unless the Contract of Employment or Employee Handbook provides differing notice provisions.

How do we account for the bank holidays?

Again, assuming that the Government provide clarity that annual leave does not interfere with the furlough leave, a bank holiday should be relatively simple.

Although, the question that confuses the matter is one related more to the payment of leave. Do you make payment at 100% and not make a claim for furlough? Do you make payment at 80% as normal through the Furlough Scheme? or do the Government make the 80% pay and you, as the employer top it up to 100% of the workers pay?

Well, again this is not entirely straightforward. If you are applying the bank holidays, then realistically, the payment should be 100%. Indications this week from the Treasury have suggested that employers will be required to top up the 80% furlough pay to 100% of the pay an employee would typically enjoy for that day. However, please be mindful that this is yet to be clarified by the Government.

Can annual leave be carried over to future annual leave years?

Once the furlough ends, employers may find themselves potentially with a workforce that hasn’t taken much of their annual leave which could leave them with a staffing challenge for the remainder of the year. So, what provisions have been made here to assist employers?

For those that are workers in key industries, the Government have allowed for 4 weeks to be carried over the following 2 annual leave years.

There has been no actual provision to allow carry over for other employees outside of those categories at this point, although it is expected. Therefore, currently we should be working to ensure that all employees take their minimum allowance (currently 5.6 weeks inclusive of bank holidays) within the leave year.

Can I extend my annual leave year?

Technically you could extend your leave year, with the agreement of the workforce, so for example, a leave year that ends in December, could be moved to end in June, so that future leave years could start and end in June, so long as the employee faces no detriment in terms of accrual of leave.

Please remember that this is an entirely new provision recently introduced to the UK, so there are going to be questions and uncertainty throughout this period. Clarification on the finer details of the application of the scheme will be required, which we are confident will come over the coming weeks.

In the meantime, please continue to talk with NucleusHR and we will do our very best to walk you through this wobbly path.


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