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Furloughing staff – how is annual leave affected?

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The government’s updated guidance for the Coronavirus Job Retention Scheme has clarified how furlough leave affects holiday entitlement. Kate Shawcross, employment solicitor at Harrison Drury, takes a look at the key issues.

Last updated April 22 2020

Will holidays continue to accrue for employees who have been furloughed?

The government’s latest guidance to employees has clarified the position on annual leave during furlough. It has confirmed that furloughed employees will continue to accrue annual leave as per their employment contract.

Can holidays be taken during a period of furlough leave?

The government guidance has now confirmed that employees can take holiday while on furlough.It also confirms that for days of annual leave taken during furlough, employers willl need to pay employees 100 per cent of the normal salary.

Therefore, employers will need to pay additional sums over and above the 80 per cent salary reclaimed through the CJRS, for days taken as holiday.

How do Bank Holidays affect furlough and annual leave?

Following the recent Easter Bank Holiday weekend, the guidance now clarifies that if employees usually take bank holidays as part of their annual leave, employers will either have to top up furlough pay to usual holiday pay, or provide employees with a day of holiday in lieu.

We expect that further changes may be announced in relation to holidays, as the guidance states that the government will keep the policy on holiday pay during furlough under review.

Will employees who have been furloughed be able to carry-over any untaken holiday, into the next leave year?

The government recently passed emergency legislation permitting the carry-over of up to four weeks’ leave (the minimum leave entitlement prescribed under the EU’s Working Time Directive) where it was not reasonably practicable to take it in the leave year it was due, “as a result of the effects of the coronavirus (including on the worker, the employer or the wider economy or society)”. Under these new regulations, any such carried-over leave may be taken in the two leave years immediately following the leave year in respect of which it was due.

While the updated CJRS guidance makes it clear that annual leave can be taken while furloughed, there will still be furloughed employees who have been unable to take all their entitlement, either because of the way the holiday year falls as against the period of furlough leave, or because they have been ill, for example. Employers will therefore have to consider each case on its facts and determine whether the employee is entitled to carry over any outstanding annual leave under the coronavirus legislation.

For more information, contact Harrison Drury’s dedicated Coronavirus Legal Support Team on 01772 349999 or via coronavirussupport@harrison-drury.com


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