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How has coronavirus changed holiday leave entitlement for my employees?

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Due to the coronavirus outbreak and the subsequent guidance from the Foreign Office against all but essential travel abroad indefinitely, you may find affected employees seeking to cancel their annual leave and use it once the restrictions have been lifted.  However, without knowing when this will happen, there is a risk that once employees can travel again they will try to use their large volume of accrued holiday all at the same time.  Our Employment Law team here review the practical steps employers can take during this time, and reviews how the guidance from the Government can assist in your planning.

To avoid the potential operational issue of your employees all taking leave at the same time, you may prefer your employees to take holiday during this quieter time, if that is the case for your business. There is also a wider employee wellbeing issue that staff should be encouraged to take regular breaks from their work, including by taking annual leave.  Annual leave is to allow employees to take a break from work and is not dependent on the ability for employees to use that time in any particular way (i.e. on a beach rather than their house).

Your obligations to permit employees to take annual leave

As an employer, you are under an obligation to ensure that your workers take their statutory entitlement in any one year as a failure to do so could result in a financial penalty.

Workers are entitled to at least 5.6 weeks annual leave a year, with EU law providing a basic entitlement of 4 weeks and UK law providing an additional entitlement of 1.6 weeks to take account of the 8 bank holidays in England and Wales. The 4 weeks of leave under EU law cannot usually be carried between leave years, meaning workers lose their annual leave if they do not take it in the year it accrues.

Amendments to carry over of annual leave due to coronavirus

Under measures introduced by Business Secretary Alok Sharma on 27 March 2020, The Working Time (Coronavirus) (Amendment) Regulations 2020 will amend the Working Time Regulations 1998 to create an exemption relating specifically to the coronavirus outbreak.  This will permit workers who have not taken all of their basic annual leave entitlement due to Covid-19, to 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, easing the requirements on your business to ensure that workers take their statutory amount of annual leave in any one year.  This will apply where at the end of the year it has not been “reasonably practicable” for a worker to take some or all of this leave “as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society)”.

This means staff can continue working in the national effort against the coronavirus without losing out on annual leave entitlement.

The changes also ensure that you have the flexibility to allow workers to carry over leave rather than trying to ensure that your workers all use their holiday entitlement in the current leave year as this could leave you short-staffed when trying to recover the business from the difficulties it has faced due to the coronavirus outbreak.

The changes will amend the Working Time Regulations 1998, which apply to almost all workers, including agency workers, those who work irregular hours, and workers on zero-hours contracts.

As well as extending the carry-over period, the change also means that:

  • If a worker’s employment or engagement is terminated during the two-year period, any payment in lieu of holiday must include a payment in lieu of holiday carried over under these provisions.
  • You continue to have the right to refuse permission for a worker to take leave on particular days (provided you give notice which is at least as long as the holiday requested). However, under the new regulations, you can only exercise this right where there is “good reason to do so”.

Practical steps for you to take

Most employers work on the basis that the basic 4-week entitlement under the Working Time Regulations is taken first, with the additional leave of 1.6 weeks taken after that.  The changes do not apply to the 1.6 weeks’ additional leave entitlement or to any contractual holiday entitlement workers might have, which remain subject to any existing agreements on carry-over.  You may have more flexibility to prevent employees from carrying-over this type of leave.  You will need to ensure your employment contracts are clear on how the annual leave is used for employees and ensure that if you give over and above the statutory entitlement that you communicate to your employees that this will not be permitted to be carried over.

Furloughed Leave and annual leave

The Government’s guidance on the Furloughed Leave scheme is currently silent regarding holiday, meaning that unfortunately the position isn’t entirely clear on how holiday entitlement will work for those who are “furloughed” under the Coronavirus Job Retention Scheme.  At the time of writing, we are currently waiting for the regulations to be published which will give us more details, at which point we can advise.

However, HMRC Customer Support tweeted on 7th April 2020 the following:

 ‘If an employee is on holiday or has a scheduled Bank Holiday while on furlough, they are entitled to still receive this holiday.  Employers must ensure that an employee on holiday or a Bank Holiday is paid their full salary for that period of holiday.’

Clearly this is no more the law than the guidance is and we still need to wait for the regulations to come through.  But it is a fairly strong indication that employees can take holiday while on furlough and that they should be paid at 100% of pay for those days.

All businesses will be going through a difficult time of change with their employees also concerned about their future.  It’s important that during this time you seek appropriate legal advice and we are on hand to assist.  While we are not taking face to face appointments, our teams are all working remotely and can offer you advice over the phone, via email or video conferencing.  To find out more about how we can be supporting your business with the regular Employment Law changes during this pandemic, you can contact the team on 023 8071 7717 or email employment@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.