Holidays when on Furlough

Just to clarify the current position regarding holidays whilst employees are on furlough leave:

• Holiday leave is still accrued whilst employees are on furlough

• Employees can take holidays whilst on furlough and under the Working Time Regulations, employees are required to be paid holiday pay at their normal rate of pay. (Where the rate of pay varies, this can be calculated based on the average pay received by the employee in the previous 52 weeks).

• Employers are therefore required to pay the additional 20% over the grant for employees that take holidays whist on furlough, but can still claim furlough for the other 80% during this holiday time. As you are still claiming furlough you are not breaking the furlough period for the three week calculation.

• Employers can restrict when leave is taken, if there is a business need, both during furlough and during the recovery period.

• Amendments to the Working Time Regulations (Northern Ireland) 2016 mean that employees will be able to carry forward up to 4 weeks annual leave into the next 2 holiday years as a result of coronavirus.

• Per Labour Relations Agency, HMRC’s Coronavirus Job Retention Scheme, whilst not legislation, does state that employees are entitled to take holiday leave whilst they are on furlough and from a legal point the Working Time Regulations state that an employer can request that employees take holiday leave by giving them positive notice of at least twice the length of their leave. Based on this The Labour Relations Agency states that there is nothing to say that employers cannot require employees to take annual leave whilst on furlough, but that this could be challenged in court at a later date and could be proven to be unlawful. So the guidance is saying you can do it, but the law could end up stating not correct at some time in the future and you could still owe the holidays at that time.

• Check contracts as this will normally have be the overriding guidance, it may already state what can or cannot be done in relation to holidays.

Disclaimer:- Our guidance is based on the best information available at this time and our interpretation of it, which is subject to change after this date. While we are happy to share this information, it is generic advice primarily for our clients, we will always recommend specific advice for our clients before acting and will accept no liability to anyone other than our own clients.