Employment Law Update: Holidays and Furlough Scheme

Vina Madhavji considers new guidance issued by the government on holiday entitlement during Covid-19.


Workers, including those on zero hours contracts, have a statutory right to take holidays of 5.6 weeks per leave year.

The ‘leave year’ period  can usually be found in the document governing the relationship such as the employment contract.

Where there is no written document, the leave year is determined to have commenced on the day on which the workers employment first started, unless the employment commenced prior to 1st October 1998, in which case each leave year is determined to commence on 1st October.

Employers may require workers to take holiday and also cancel a workers holiday provided that they provide sufficient notice. The required notice periods are:-

  • twice the length of the holiday if the employer wishes to require a worker to take holiday on particular days
  • the length of the planned holiday if the employer wishes to cancel a worker’s holiday or require the worker not to take holiday on particular dates.

Enhanced Contractual Rights

It is important to understand that the above sets out general principles relating to the current legal position on the minimum that is required. Your Employer s is at liberty to provide you with a greater number of holidays and a more favourable  ‘leave year’ with the specific  terms of your contract.

New Guidance Issued This Week

The government has this week announced that employers can require workers to take holidays during their furlough as long as they provide the requisite notice.

The guidance states:-

The notice requirements for their employer requiring a worker to take leave or to refuse a request for leave continue to apply.

Employers should engage with their workforce and explain reasons for wanting them to take leave before requiring them to do so.

If an employer requires a worker to take holiday while on furlough, the employer should consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday.

Therefore an Employer could require  worker to take a week’s holiday on the third week of furlough if they provided two weeks notice at the start of furlough.

Carrying Annual Leave into Future Leave Years

The 5.6 weeks of statutory holiday is split into 4 weeks and 1.6 weeks and different rules apply to each period.

The general principle is that the 4 weeks cannot be carried over into the following leave year but the 1.6 weeks can if there is a written agreement with the employer.

In certain circumstances such as a worker being on maternity leave or on sick, employers must permit the 4 weeks to be carried forwards. These rights remain the same for those who have been furloughed.

However under certain circumstances employers must allow the 4 weeks to be carried into future leave years. Where a worker cannot take annual leave due to their being on maternity leave or sick, employers must still allow workers to carry their annual leave forwards. These rights remain unaffected by a worker being furloughed.

Under new emergency legislation, The Working Time (Coronavirus) (Amendment) Regulations 2020, with effect from 9pm on 26th March 2020, workers may carry holiday forward into the following two leave years where the impact of coronavirus means that it has not been reasonably practicable to take it in the leave year to which it relates.

An employer can only prevent a worker taking carried forward leave on particular days where the employer has good reason to do so. If any of such carried forward leave remains untaken then at the end of employment the worker is entitled to a payment in lieu of it.

When calculating how much holiday a worker can carry forwards, employers must give workers the opportunity to take any leave that they cannot carry forward before the end of the leave year.

Amount of Holiday Pay Whilst on Furlough

If you take holiday whilst on furlough the general principle is that you are entitled to payment of holidays calculated on the basis of usual earnings (i.e. not the amount they are receiving on furlough).

An employer is only permitted to pay at the furloughed rate of they are topping up a worker’s salary to 100%.

An employer can claim the standard furlough amount for the period the worker takes holiday during furlough ( i.e. 80% of the holiday pay). However, the employer will be required to make up the 20% of normal pay whilst the worker takes holiday on furlough.

The guidance can be found here

If you need employment advice contact Vina on 01254 31 12 82, email enquiries@watsonramsbottom.com, talk to us via live chat or alternatively complete our online enquiry form and one of our experts will contact you.

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