They think it’s all over – it is now! COVID-19: Furlough and Holiday Update April 20th 2020

By Nic Hart 


Good evening. I am hopeful that this is the last “ COVID-19 UK Furlough” update you will receive…from me at least!

HMRC has now provided us with some much needed clarity on taking annual leave while on furlough. This has been an update to the Employees Guidance, not the Employers Guidance (as at the time of this email).

Put simply it states;

An employee can take holiday whilst on furlough leave. Working Time Regulations (WTR) require holiday pay to be paid at the employees normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay the employee received in the previous 52 working weeks.

  1. If an employee takes holiday while on furlough, the employer should pay the employees usual holiday pay in accordance with the WTR. Employers will be obliged to pay the additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period.
  2. If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If bank holidays are usually taken as leave then the employer would either have to top up the employees pay to their usual holiday pay, or give the employee a day of holiday in lieu.

There is no guidance whether employees can be compelled to take annual leave while on furlough but there is clearly room for further review as the updated Employee Guidance concludes with;

“During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.”

I will continue to keep this under review.

For More Information

Please contact Nic Hart or Liam Hutton, or another member of the Duane Morris London Office.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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