New guidance on holiday entitlement during coronavirus

17th May 2020: The issue of holiday entitlement during coronavirus has been more than a little confusing for employers and last week’s new guidance (13th May) from the Department for Business, Energy & Industrial Strategy (BEIS) was therefore welcome.

What does the new guidance say?

In a nutshell, the latest guidelines clarify that workers on furlough continue to accrue holiday and can also take holiday whilst on furlough. Crucially, as long as employers give enough notice they can require workers to take holiday and can also cancel holiday that has already been booked. This applies to furloughed and non furloughed staff, although consideration must be given to whether furloughed staff are under any restrictions, such as needing to self-isolate, which would prevent them from resting, relaxing and enjoying their holiday time. Clarity is also provided on the subject of whether holiday entitlement can be carried forward.

Taking holiday

Holidays continue to be calculated as normal under the Working Time Regulations 1998 (WTR). The usual rules also apply in terms of an employer’s ability to refuse permission for leave on specific days, including cancelling booked holidays, and specify times when leave must be taken (as would happen during factory shutdown periods).

For furloughed employees, as long as the employer is certain that the worker would still be able to rest and relax during the period of annual leave, the same rules apply. Employers are advised to engage with furloughed staff to explain the reasons behind their request for them to take leave.

Bank holidays

Employees do not have a statutory right to leave on a bank holiday (though of course many employees have a contractual right) and bank holidays may be included as part of statutory holiday entitlement, or not as the case may be.

The BEIS guidance states that if furloughed staff would have usually worked the bank holiday under their contract of employment, their furlough is unaffected by the bank holiday. If they would have had the day off, the day’s entitlement can either be taken as annual leave or deferred.

Holiday pay

Whether a worker is furloughed or not, holiday pay continues to be calculated in line with current legislation. Effectively, a worker should not be worse off financially as a consequence of taking holiday and therefore holiday pay calculations should be based on normal working hours.

Deferring holiday

When the government announced on 27th March that the WTR has been amended to allow workers to carry forward of up to four weeks accrued holiday leave, many employers were rightly concerned that they may face problems resuming economic activity and accommodating staff holiday requests.

The WTR states that employers should do everything reasonably practicable to ensure that the worker is able to take as much of their leave as possible in the year to which it relates, and where leave is carried forward, it is best practice to give workers the opportunity to take holiday at the earliest practicable opportunity.

The latest guidance clarifies what is ‘reasonably practicable’, for example:

whether the business has faced a significant increase in demand due to coronavirus that would reasonably require the worker to continue to be at work and cannot be met through alternative practical measures
the extent to which the business’ workforce is disrupted by the coronavirus and the practical options available to the business to provide temporary cover of essential activities
the health of the worker and how soon they need to take a period of rest and relaxation
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
the extent to which the worker taking leave would impact on wider society’s response to, and recovery from, the coronavirus situation
the ability of the remainder of the available workforce to provide cover for the worker going on leave

The guidance can be read in full here: https://www.gov.uk/guidance/holiday-entitlement-and-pay-during-coronavirus-covid-19