As we enter the Summer holiday season and the lockdown restrictions are easing, employees minds are turning to taking holidays. With businesses facing the dual pressures of managing the return to work and employees who have, whether on furlough or not, accrued significant unused holiday, we consider the annual leave landscape and the challenges employers will now be facing.

Furlough and annual leave

Government guidance on Holiday entitlement and pay during coronavirus (COVID-19) confirms that employees who are furloughed may take annual leave without the furlough period being interrupted.

However, where annual leave is taken during furlough, the employer is obliged to top up the amount paid to the employee to their normal rate of pay for any period of holiday.

The Flexible Furlough Scheme, which came into effect on 1 July 2020, has meant employers can bring their employees back to work on a flexible, part-time basis and claim under the Scheme for the remaining unworked hours. However HM Revenue and Customs guidance on the scheme does make clear that employees should not be furloughed simply to benefit from the grant because the employee will be on holiday for that period. Essentially, the employer’s decision to furlough should not be influenced by annual leave, although when an employee takes holiday during a flexible furlough period, such time can be recorded by the employer as time worked so long as the employee receives their normal holiday pay rate.

Requiring employees to use up holiday

Where employers are concerned about the amount of holiday that employees have accrued and can afford to top up pay to the employee’s normal holiday pay rate, there are options open to them.

The Working Time Directive allows employers to compel employees to take holiday by giving twice the amount of notice of the requirement to take holiday as the length of the holiday proposed, eg. two days’ notice for four days of leave. Equally the employer may communicate that all holidays that have already been booked may not be cancelled.

Dealing with the challenges of employees returning from holidaying abroad

With effect from 10 July 2020, anyone returning to the UK from a country which is not part of the travel corridor exemption, will be required to quarantine and self-isolate for 14 days. Full guidance is available here. Employers will need to have given thought to how they will deal with those who choose to holiday outside this travel corridor. The options open to employers will very much depend on the role the employee performs:

  • Where an employee already works from home or their role may temporarily be performed at home, the quarantine period can be fulfilled in this way. If there is insufficient work to be done on this basis, the employee may be furloughed under the flexible furlough scheme (if they are eligible), for the remaining hours.
  • For employees who are already furloughed, the employer may choose to continue the furlough arrangements, although they are under no obligation to do so.
  • Where employees still have sufficient holiday accrued, the employer may impose some or all of the quarantine period as holiday as long as the notice periods outlined above are followed.
  • Alternatively, where none of the above options are feasible, the employer may opt to place the employee on unpaid leave for the period of the quarantine. It is unlikely that this period of quarantine would qualify an employee for SSP payments.

Whichever option the employer decides to follow, it would be wise to communicate it in advance of the annual leave being taken and to advise that the employee should be adhering to the government guidance.

If you would like any further advice or information on annual leave, please don’t hesitate to get in touch.