COVID-19 UK: Employment – Holiday in the time of COVID-19 – Update

On 13 May 2020, the UK government published guidance giving employers much needed clarity on how holiday entitlement and pay operate during the Coronavirus pandemic. It considers both those who continue to work and those who have been placed on furlough under the Coronavirus Job Retention Scheme.

When the government issued travel advice against all non-essential travel back in mid-March, perhaps we might have been forgiven for thinking that summer plans would be unaffected. However, it is becoming clear that such plans will also have to be put on hold and so employees may be considering cancelling their holiday bookings.

Employers can require workers to take holiday; even those on furlough

If you want to avoid all your employees holding onto their holiday in the hope that, towards the end of the year, we will be able to travel again, then you can require them to take holiday, even if they are on furlough. To require holidays to be taken, you can either agree this with your employees or you can serve notice on them, which must be double the length of the holiday the employer wishes the employee to take. Two weeks’ notice for a one week holiday, etc.

One caveat set out in the guidance, however, is that employers “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”, citing this as the fundamental purpose of holiday. This has clearly been included as a reflection of the case law on the topic but, it seems rather a high bar for employers to meet, when enjoyment is entirely subjective and most employees would probably rather not take their holidays in their own garden, if indeed they are lucky enough to even have a garden. We cannot see how employers can make such an assessment, so the advice is to press ahead with plans to require employees to take holiday if you want to, even if they are on furlough, but just be sympathetic to individual circumstances which are raised with you, as part of that process.

Employers must top up to full pay if furloughed employees take annual leave

The underlying principle for holiday pay is that a worker should not be financially worse off as a result of taking holiday. As such, holiday pay should reflect what the employee would have earned had they been at work, working. This means that if employees are not receiving their normal pay whilst on furlough, the employer has to top up. Those employees who are receiving the reduced government amount on furlough may therefore be more amenable and even incentivised to take holiday, if they know that they will be paid full pay for it. As taking holiday does not break the furlough period, employers can still claim back 80% (or up to £2,500 a month) of the cost of holiday pay.

However, for an employer that would struggle to top up due to the impact of COVID-19 on its operations, this is explicitly recognised in the guidance as an example of where it is likely to be not reasonably practical for a worker to take their leave, allowing them to carry forward leave instead (see below).

Employers can allow workers to carry annual leave into future years

Early on in this crisis, the government passed emergency legislation in recognition of the fact that for many employees, the impact of COVID-19 meant that they would not be able to take all of their annual leave in the leave year to which it relates. As a result, employees can now carry forward 4 weeks of annual leave (for full time employees) into the following 2 leave years.

The guidance suggests that those on furlough are unlikely to need to carry forward leave, stating that most people will take it during the furlough period. This is interesting in light of the requirement to consider whether the need to socially distance or self-isolate would prevent the worker from ‘resting, relaxing and enjoying leisure time’, but does add weight to our argument that you cannot make this assessment and should push ahead with plans to require employees to take holiday during furlough, if that is what will work best for your business.