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Further Clarity of Furlough Leave

Last week, the government provided much wanted clarity with regards to annual leave and redundancies with furloughed employees. But why is this update more important than all other times that clarity has been provided by the government? Why should this grab your attention?

Well, this time, commercially sensitive employers, those with cash flow issues, those that might be facing workforce planning issues when they return post lockdown have a real opportunity to head off some prominent issues, whilst subsidised by the government scheme – but you will have to act fast to make this work for your business, given that the scheme is due to expire on 30th June 2020.

Firstly, we are going to walk you through the basics, before guiding you through what to do next.

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 furlough.

Can employees book and take holidays throughout a furlough period?

Originally, this was a point of confusion as to whether if annual leave would be seen as an interruption to the minimum 3 week period of furlough.

It has recently been clarified that annual leave can be taken throughout the furlough period and will not effect the furlough period.

Any annual leave periods will need to be paid at the employees normal rate of pay although, the government have confirmed that you can use the furlough grant and top up to the employees normal rate of pay.

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

Therefore, any employer that thinks that they may have labour planning issues in relation to employees booking annual leave throughout the second half of the year should be acting now to issue notice of enforced annual leave. Thereby subsidising your annual leave payment with the government furlough scheme.

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.

If I need to make more permanent staffing cuts, can I look at redundancies? This was a point of much confusion until last week, how do you consult with someone who is furloughed, under a scheme that is designed to protect employee jobs?

The official position of the government is, yes, an employer can still make an employee redundant whilst they are furloughed or afterwards, subject to existing redundancy legislation.

The government have also clarified that whilst furloughed employees may still undertake union or non-union duties and activities, such as representation of employees or other workers. (Although in doing this they must not provide services to or generate revenue for or on behalf the organisation).

If you are thinking that you will need to make permanent staffing cuts in order to safeguard your business longer term, you can indeed start consultation and issue notice throughout the furlough period, therefore, we encourage you to start now.

As an employers, I am confused as to what I should be doing next so I do not end up with problems post lockdown?

Understandably, your staffing model may need to change throughout the lifting of restrictions as we move into the recovery phase. If you wish to understand how best to approach your revised vision, please do call us at NucleusHR on 07960 418494.

Again, if you are not looking at making staffing changes, but you do not want to get caught with employees wishing to take their entire entitlement to annual leave in perhaps only half the normal leave year, please do contact NucleusHR by emailing


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