The Government has provided some much needed clarity on the tricky topic of annual leave. New guidance, published on 13 May 2020, covers issues such as the interaction between holiday and furlough and the new right to carry forward untaken statutory holiday.
“Not Reasonably Practicable”
A raft of emergency legislation was passed to enable the Government to manage the Coronavirus pandemic including new regulations permitting employees to carry forward up to 4 weeks of annual leave where it was “not reasonably practicable” for the leave to be taken before the end of the relevant holiday year. Leave carried forward in this way can be used in the subsequent two holiday years.
However, employers remain under a legal obligation to ensure holiday is taken in the year in which it is accrued. There are good health and wellbeing reasons for this as the purpose of holiday is to allow an employee time to rest and recuperate, something which is particularly necessary following busy periods.
The new guidance places great importance on holiday being taken in the year it accrues. It provides a list of factors employers should consider when assessing whether holiday can be taken including whether there has been a significant increase in demand for the employer’s services or products arising from coronavirus and the employee’s ability to take leave at a later time in the year, perhaps when demand has waned. The impact on society’s response to the coronavirus should also be taken into account.
The right to carry over does not affect an employer’s ability to require an employee to take holiday or to state that holiday cannot be taken at specific times. Employers may only refuse an employee’s request to take carried forward holiday with good reason, and where holiday is carried forward to a second holiday year, the employer must facilitate it being taken (along with the leave the employee accrues in the ordinary way during that year). In line with the usual rule, a payment in lieu of statutory holiday (including any holiday which is carried forward) cannot be made except when employment ends. Although employers could pay in lieu of contractual holiday which exceeds the statutory minimum.
It is notable from the way the guidance is worded that carry over will only be truly appropriate in limited circumstances and should not be viewed as the default position.
Holiday and Furlough
The Government had already confirmed that furloughed employees continue to accrue statutory holiday which they are able to take during their period of furlough. The latest guidance explicitly states that employers may direct an employee to take a period of time as holiday whilst furloughed, providing the proper notice is given. However, where such a direction is made the rationale should be explained to staff and an employer should asses whether those who are self-isolating or socially distancing can take meaningful leave. It is unlikely those who are self-isolating will be able to take meaningful holiday given that their freedom will be severely restricted. Similarly, those on sick leave cannot be compelled to take holiday (although they can take holiday if they so wish).
The Government furlough grant will cover periods of holiday (up to the applicable maximum limit on pay) but employers must make up the difference to ensure the employee receives their full holiday pay, which is to be calculated in the normal way.
Clear and timely communication is likely to be key to ensuring that holiday and holiday pay in the time of coronavirus are managed properly within the workforce.
Whilst the new guidance is of use to employers and workers alike, it is important to remember that it does not have legal effect, it is only guidance, and complex laws, including EU laws, govern holiday and holiday pay irrespective of any Governmental guidance.
The contents of this briefing are for information purposes only. All circumstances are unique and the information and opinions expressed in this document do not constitute legal advice and should not be regarded as a substitute for legal advice. No liability is accepted for the opinions contained or for any errors or omissions.