Holiday entitlement and pay during the Coronavirus outbreak

Posted on 20th May 2020 by Streets


Image to represent Holiday entitlement and pay during the Coronavirus outbreak

It is designed to help employers understand their legal obligations, in terms of workers who

continue to work or have been placed on furlough as part of the government’s Coronavirus Job Retention Scheme (CJRS).

The guidance should not be treated as legal advice. Employers and workers should always check individual contracts and, if necessary, seek independent legal advice.

Holiday entitlement

Almost all workers, including zero-hour contracted workers and those on irregular hours contracts, are legally entitled to 5.6 weeks’ paid holiday per year. The exception is those who are genuinely self-employed.

For the purposes of calculating holiday entitlement, the statutory 5.6 weeks entitlement is split into 4 weeks derived from EU law, and an additional 1.6 weeks from UK law. This guidance focuses on the legal minimum entitlement of 5.6 weeks. Many workers have contracts that entitle them to additional paid holiday beyond this, known as contractual holiday entitlement. Workers and employers can agree to alter the terms of the worker’s contract, providing it does not go below the statutory minimum of 5.6 weeks.

A worker has the same holiday entitlement, regardless of whether they are on sick leave, maternity leave, parental leave and adoption leave and other types of statutory leave. A worker may request holiday at the same time they are on sick leave but cannot be required to take it whilst off sick.

Furloughed workers

Workers who have been placed on furlough continue to accrue statutory holiday entitlements and any additional holiday provided for, under their employment contract. Use the government holiday entitlement calculator to calculate a worker’s statutory holiday entitlement.

Taking holiday

Employers can:

  • require workers to take holiday
  • cancel a worker’s holiday, if they give enough notice to the worker

The required notice periods are:

  • double 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

Employers can ask workers to take or cancel holiday with less notice but need the workers’ agreement to do so.

These notice periods are in advance of the first day of the holiday, and the notice must be given before the notice period starts. For example, if an employer wanted to prevent a worker taking a week’s holiday, they would have to give notice earlier than 1 week before the first day of the holiday. For the purposes of calculating the notice period, any uninterrupted period of holiday counts as a single period. These rules on notice periods can be altered by a binding written agreement between the employer and the worker.

Furloughed workers

Workers on furlough can take holiday without disrupting their furlough. 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 whilst 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.

Bank holidays

There is no statutory right to time off for bank holidays. Employers can include bank holidays as part of a workers’ statutory holiday entitlement if they choose, but do not have to do so.

Where necessary, employers can require workers who would usually take bank holidays as holiday to work instead, using the standard notice periods. Employers must still ensure that the workers receive their statutory holiday entitlement for the year.

Furloughed workers

Where a bank holiday falls inside a worker’s period of furlough and the worker would have usually worked the bank holiday, their furlough will be unaffected by the bank holiday.

However, if the worker would usually have had the bank holiday as annual leave, there are two options:

1. The bank holiday is taken as annual leave

If the employer and the worker agree that the bank holiday can be taken as annual leave whilst on furlough, the employer must pay the correct holiday pay for the worker. Employers may also require workers to take the bank holiday as annual leave with the correct notice periods.

2. The bank holiday is deferred

If the employer and the worker agree that the bank holiday will not be taken as annual leave at that time, the worker must still receive the day of annual leave that they would have received. This holiday can be deferred to a later date, but the worker should still receive their full holiday entitlement.

Holiday pay

The amount of pay that a worker receives for the holiday they take, depends on the number of hours they work and how they are paid for those hours. The principle is that pay received by a worker whilst they are on holiday should reflect what they would have earned if they had been at work and working.

Holiday pay, whether the worker is on furlough or not, should be calculated in line with current legislation - see the standard guidance, based on a worker’s usual earnings. The underlying principle is that a worker should not be financially worse off through taking holiday. Where a worker has regular hours and pay, their holiday pay would be calculated based on these hours. If they have variable hours or pay, their holiday pay is calculated as an average of the previous 52-weeks of remuneration, excluding weeks in which there was no remuneration.

Furloughed workers

An employer should not automatically pay a worker on holiday the rate of pay that they are receiving whilst on furlough, unless the employer has agreed not to reduce the worker’s pay whilst on furlough.

If a worker on furlough takes annual leave, an employer must calculate and pay the correct holiday pay in accordance with current legislation - see the standard guidance. Where this calculated rate is above the pay the worker receives while on furlough, the employer must pay the difference. However, as taking holiday does not break the furlough period, the employer can continue to claim the 80% grant from the government to cover most of the cost of holiday pay.

Further details and guidance can be found at: https://www.gov.uk/guidance/holiday-entitlement-and-pay-during-coronavirus-covid-19

This guidance covers:

  • Carrying leave forwards – how new legislation has changed the rules
  • Handling leave that has been carried forward
  • Giving notice to workers
  • Requiring workers to take annual leave
  • Payment in lieu for carried leave
  • Furloughed agency workers:

            - Accrual of holiday during furlough

            - Taking holiday leave and receiving holiday pay during furlough


No Advice

The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.

Information

The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.


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