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Coronavirus guidance: Holiday entitlement and employees


Holidays during Covid 19

The government has announced their intention to relax the rules around holidays meaning that employees who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry it over into the next 2 leave years.

The regulations will allow up to 4 weeks of unused leave to be carried into the next 2 leave years.

If there is a holiday during a furlough period, then you should add the holiday onto the furlough period, thus making sure it is over three weeks, but in your claim to HMRC only claim for the weeks outside the holiday period. This should also be explained to the employees in their consent letter, stating that they will receive full pay during the holiday period, and 80% of earning outside it.

Furlough and Holiday pay

Whilst furloughed employees will continue to accrue leave as per their employment contract. Employees can agree with their employer to vary holiday pay entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

Employees can take holiday whilst on furlough. Working Time Regulations (WTR) require holiday pay to be paid at their normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay they received in the previous 52 working weeks. Therefore, if an employee does take holiday while on furlough, the employer should pay the usual holiday pay in accordance with the WTR. Employers are obliged to pay the additional amounts over the grant, though they have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period.

If an employee usually works bank holidays, then the employer can agree that this is included in the grant payment. If an employee usually takes the bank holiday as leave, then the employer can either top up pay to the usual holiday pay level, or give a day of holiday in lieu.

The government has advised that it is keeping the policy on holiday pay during furlough under review during this unprecedented time.

Further advice on the treatment of holidays is below.

Holidays & Covid-19 FAQs

Can I enforce holidays?

No, if you normally allow employees to select holidays. Yes, if this is a holiday which has already been posted on your notice board, or is a normal shut down such as Easter.

Can an employee change a holiday which he has already booked?

This is up to the employer, you can if you wish insist your employee receives holiday pay for a pre-booked holiday. If you allow the employee to work instead, remember they are still accruing holiday entitlement which they can take when matters return to normal.

What if employees holiday falls when they are self-isolating?

If this is an already agreed shutdown, the company can pay holiday pay (which will be deemed to include SSP) and therefore reduce the holiday accrual. If it is an elected holiday by the employee, they can choose to postpone it and continue to receive SSP.  In this case the employee will still accrue holiday to be taken on his return to work.

Can I stop a key worker from taking holiday at a particular time?

If it is pre-booked, only by agreement.

What if an employee asks me if they can take holiday instead of being furloughed in order to achieve 100% of normal earnings?

An employee must give a company two weeks’ notice of a request for a holiday of 2 weeks, and the employer can refuse if they give an alternative date.  However, many companies are allowing requests for holidays in these troubled times.

UKFT is in constant dialogue with the government and is outlining the latest support available for businesses on our website. We will update the details as and when the situation changes. 

UKFT Coronavirus Guidance