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Furlough and annual leave


The Coronavirus Job Retention Scheme opened to applications earlier this week, seeing a colossal 140,000 employers apply for support on the first day. If you’re a furloughed employee, it’s understandable if, during these challenging times, you’re just relieved to have a wage at the end of the month.

But you might also start to wonder if you’ll still have access to your employee benefits, just how much annual leave you can take, and what exactly you’ll be entitled to during the furlough period – which has now been extended until the end of June.

The government and HMRC have issued some guidance to help both employees and employers understand their rights during this challenging time. Read on for all the details.

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Does annual leave accrue during furlough?

Yes, it’s still your right as an employee to gain paid annual leave as usual. Even if you’re classed as a furloughed employee, there will be no change to the way your annual leave builds up. You are still covered by your contract of employment, so you’ll be entitled to all the same agreed terms and conditions that are detailed in your contract– and this includes your benefits and holidays.

Will I be paid for any annual leave I take during furlough?

Yes, you’ll be paid – and not just at the furlough rate either. You’re still entitled to be paid your full salary for any annual leave days you decide to take during the furlough period.

According to the HMRC website: “Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.”

This means that if you decide to take a holiday during furlough, you’ll receive your usual furlough rate of 80% from the government, and your employer will have to top up the additional 20%.

What if I can’t take my annual leave right now?

There have been some short-term changes to the Working Time Regulations to allow for the current circumstances of the Covid-19 pandemic. So, if you’ve been affected by coronavirus and it’s resulted in you being unable to take your holidays, you may be able to carry over up to four weeks of paid holiday into the next two holiday years.

You may have been affected by coronavirus if you:

  • Have had to self-isolate at home
  • Are unable to work because you’re unwell
  • Are a key worker, and your employer has asked you keep working
  • Have been furloughed and can’t reasonably use your full holiday allowance

If you already have some form of agreement in place with your employer to carry over any unused paid holidays into the next year, this won’t be affected by the new law. And if you do end up leaving your job for any reason and have already postponed your paid leave due to coronavirus, this accrued holiday must be added to your final pay.

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Am I still entitled to my employee benefits?

If you’re a furloughed employee, you’re still entitled to any statutory employee benefits, such as Statutory Sick Pay, Parental Leave, and minimum pension contributions. You’ll also continue to receive any non-discretionary benefits that are outlined in your contract of employment.

This also applies to your statutory holiday allowance, which is 28 days or 5.6 weeks per working year for full-time employees. This may or may not include bank holidays – it depends on your contract. And if you’re a part-time employee, this allowance will, of course, be calculated pro-rata.

Can my employer insist I take annual leave during furlough?

When you book any form of annual leave, it does have to be with the agreement of your employer.

They’re also well within their rights to ask you to book a holiday, for instance, if they close for a short period of time. However, if they do request that you take a holiday, your employer will need to give you at least double the amount of notice, in days, as the number of days they’ve asked you to book off.

So for example, if your employer intends to close for four days, and asks you to take these days as leave, they’re required to let you know about this eight days before doing so.

If you consider the situation from your employer’s point of view, if all a company’s employees take no time off during the furlough period and return to work with loads of holiday built up, this may affect resource.

Can my employer cancel my booked holiday?

Under general employment law, yes, your employer can cancel a holiday if you’ve already booked one (unless there are specific provisions against this in your employment contract) but again, they have to give you as many days’ notice as you have booked off before doing so. They also have to explain to you why they’ve asked you to cancel your holiday, and do their best to help if your plans have been disrupted.

Are you finding yourself struggling to make ends meet because of the coronavirus crisis? Sadly, you can’t take a break from debt issues – but you can ask for help to sort them out. Get access to free, expert advice and support. Call us on 0808 253 2974 and find out how to get a handle on your finances, today.

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