With Christmas approaching and many companies undergoing a shutdown period between Christmas and New Year, employers should be aware that this period should not be taken as an opportunity to place employees on furlough.

Employees who are furloughed may take annual leave without the furlough period being interrupted. However, the employer’s decision to furlough should not be influenced by annual leave, and employees should not be placed on furlough simply because they are taking holiday for that period.

Furlough and holiday entitlement

Employees can take holiday whilst on furlough, and the normal rules on calculating holiday pay under Working Time Regulations continue to apply. For employees who have variable pay, holiday pay should be calculated on the basis of the average pay received by the employee in the previous 52 working weeks.

For periods of holiday taken by furloughed employees, employers will be obliged to pay additional amounts over the furlough grant, and cannot claim the additional holiday pay from the grant.

For employees who are flexibly furloughed, any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.

The government guidance on Holiday entitlement and pay during coronavirus (COVID-19) published in May remains unchanged, which provides detailed guidance on requiring employees to take annual leave, and changes to the legislation on carrying annual leave into future leave years.

If you have any queries regarding furlough and holiday entitlement, or need assistance calculating holiday pay for furloughed employees, please do not hesitate to get in touch with Chloe Hughes, Head of Payroll. Chloe has extensive experience providing a range of businesses with bespoke payroll solutions that meet the needs of each individual business.