In light of the upcoming Easter weekend, this blog discusses how annual leave, and in particular bank holidays, should be dealt with under the Coronavirus Job Retention Scheme. Since this blog there have been several updates from government. You can read the details in our new guidance on furlough and annual holidays which was updated on 20 May.
Annual leave whilst on furlough
Although the government released updated guidance on 4 April 2020 in relation to the Coronavirus Job Retention Scheme, the interaction between annual leave and furlough remains unclear. In particular, it is unclear whether employees can take holiday during furlough, and if they can, what rate of pay should they receive (i.e. should it be their normal rate of pay, or can it be paid at 80%).
The ACAS Guidance has, however, been updated and does say that employees can take holiday whilst on furlough as normal. This is certainly our view.
We also believe that when holiday is taken it should be paid at the employee’s normal rate of pay, and should not be reduced to the temporary amount of 80% which can be paid during furlough. Therefore, where an employee is being paid 80% of their normal wages, it may be advantageous for them to take holiday, as they can then ‘top up’ their pay to their normal (100%) pay.
However, it is less clear whether an employer can require an employee to take holiday. If this is possible, then the normal notice provisions would still apply, of twice the period of leave that the employer is asking the employee to take. Therefore, to require an employee to take 1 week of holiday would require 2 weeks’ notice.
But to allow an employer to require an employee to take holiday is open to abuse. If the employer is topping up the employee’s wages from 80% to 100%, to require an employee to take holiday whilst on furlough is essentially asking them to give up holiday. To prevent this abuse we could see a situation whereby an employee can take holiday if they want, but an employer not being able to require an employee to take holiday. This is similar to the situation which applies where an employee is on sick leave. However, the guidance certainly doesn’t say this at the moment, and it would require further guidance, or legislation, from the government before this was the case.
In summary, for the moment, it appears that an employee can ask to take holiday whilst on furlough. Further, whilst it is unclear, the current ACAS guidance suggests that an employer can require an employee to take holiday, by giving the appropriate period of notice, but this point is less clear as it could be open to abuse.
What about bank holidays, particularly with the Easter bank holidays of Good Friday and Easter Monday, coming up?
Under the Working Time Regulations, most employees and workers have a right to a minimum of 5.6 weeks paid annual leave. This equates to 28 days a year for a full-time employee. Whilst it is common for employers to express the holiday entitlement as a number of days plus bank holidays (e.g. 20 or 25 days plus bank holidays), under the Working Time Regulations bank holidays aren’t specifically recognised and effectively they are just part of the employee’s normal holiday entitlement, with just the employer having specified that holiday is to be taken on those days.
Again, the ACAS guidance suggests that employees and workers may still be required by the employer to use a day’s paid holiday for bank holidays, including when they are furloughed. If bank holidays are just part of an employee’s normal holiday entitlement, and as suggested by ACAS employees can take, and be required to take, holiday as normal during furlough then this would certainly appear to be correct.
If effectively bank holidays are simply part of an employee’s normal holiday entitlement, but just a day on which the employer has required the employee to take holiday, then an issue could arise if the notice to put an employee on furlough cancels out any holiday scheduled to be taken. If this is the case, then the employer or the employee would have to request again for the bank holidays to be taken. As outlined above, it is less clear as to whether an employer can require an employee to take holiday during furlough leave. If the answer to this is no, then it may not be possible for an employer to require an employee to still take the bank holidays as normal. If this is the case, then the employer will have to allow the employee to take the holiday due to be taken on the bank holidays later in the year. However, this will simply increase the amount of holiday than employees need to take when businesses return to normal, and so we are suggesting to employers that they treat the bank holidays as normal holiday, and therefore pay for these two days at the normal rate of pay.
If you would like further guidance in relation to this topic, please contact a member of the Employment team.
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