CJRS Annual Leave Guidance

The Coronavirus Job Retention Scheme (“CJRS”) has thrown up so many questions that, initially, no one knew the answers to. Slowly, but surely, the Government has drip fed us the answers to questions. Yesterday, they published further guidance on how holiday entitlement and pay operate during the coronavirus pandemic.

The guidance makes it clear that Workers who have been placed on furlough continue to accrue statutory holiday entitlements, and any additional holiday provided for under their employment contract.

Employers can also require workers to take holiday, or cancel holiday (provided sufficient notice has been given). Unless your workers’ contracts provide otherwise, the notice periods are:

  1. Double the length of the holiday if you wish to require a worker to take holiday on particular days.
  2. The length of the planned holiday if the employer wishes to cancel a worker’s holiday.

Of course, either can be done on shorter notice provided that the individual agrees.

The guidance also confirms that you can require furloughed employees to take annual leave and that this will not break the minimum 3-week period required under the CJRS. With regards to bank holidays whilst on furlough, you can either:

  1. Agree that it can be taken as annual leave as normal (but they must receive holiday pay in full, not the furloughed salary); or
  2. Agree that it is deferred and that the employee can take a day at a later day.

However, companies should also consider whether the current restrictions, such as lockdown and social distancing, would prevent them from resting, relaxing and enjoying leisure time. As such, there is still a slight ambiguity surrounding whether it is right to ask employees to take annual leave whilst furloughed. Nevertheless, the guidance document confirms that it is possible to do so but heavily caveats this by inferring the Courts will be the ultimate decision makers. This is because holiday is governed by the Working Time Regulations which is European led law and the European Courts have historically taken a very strict view on what may constitute ‘holiday’ (e.g. holiday cannot be taken during maternity leave or in certain circumstances, when ill. The best approach is to gain consent from those you wish to place on annual leave, highlighting the benefit that they will receive full pay rather than furloughed pay for that period.

How to calculate holiday pay is a complicated question, made even more so by adding coronavirus into the mix. If you need guidance on how to work out what holiday pay your employees are entitled to, you might find our page “calculating holiday pay” useful, or contact us for further information.  The general rule of thumb is that those workers who have “normal working hours” (e.g. 9am-2pm three days a week) will simply have their holiday pay calculated with reference to those hours. If you have a worker who has “no normal working hours” y caveats this (e.g. they are on zero hours contract), a week’s pay is calculated as an average of all remuneration earned in the previous 52 working weeks.

Either way, holiday pay should be paid at the normal rate, and not the furloughed rate of pay, with the overarching principal being that individuals should receive pay that reflects what they would have earned had they been working. Of course, you can continue to reclaim 80% of the salary, even if the employee is receiving full pay in respect of a period of annual leave whilst furloughed.

The updated guidance also summarises the new legislation regarding carrying over annual leave to future years. The new emergency legislation is intended to ensure businesses have the flexibility they need to respond to the coronavirus pandemic and to protect workers from losing their statutory holiday entitlement. It enables workers to carry holiday forward where the impact of coronavirus means that it has not been reasonably practicable to take it in the leave year to which it relates. Leave can be carried forward to the following two leave years.

If you need any help navigating the rules surrounding annual leave in light of the coronavirus pandemic, please get in touch.

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