Annual Leave, Bank Holidays and Furlough

With Easter Weekend falling at the end of this week, companies may be wondering how furlough may impact upon employee rights to take annual leave.

There is currently no clarity from the Government on the interaction of annual leave and furlough. However, Acas, and other commentators, seems to suggest that annual leave can be taken during furlough. That would make the impending Easter weekend much less of a problem for businesses whose employees are currently furloughed, in that the Bank Holidays would not break the furlough period.

Current guidance from Acas outlines that ‘employees and workers may still be required to use a day’s paid holiday for bank holidays, including when they’re furloughed’. This therefore appears to state that employees can take annual leave during furlough and it will not break the period of furlough that can, provided it is minimum three weeks, be claimed under the Job Retention Scheme. It is important to remember that this is based on the Acas position and has not been confirmed by the Government.

With regards to pay, what should the employee get paid during annual leave that occurs during furlough? If the agreement is that furlough pay is 100 per cent of their wages, this should be stuck to during annual leave. If the agreement is that pay has reduced to 80 per cent, then there is still a strong argument that holiday pay should be 100 per cent, including all the elements that would normally be included, because of the ‘normal pay’ requirement during annual leave. Employers cannot contract someone out of their rights on annual leave.

It should be remembered that this is likely to only apply to the 5.6 weeks of statutory leave that organisations must provide opportunity for employees to take per year. Any contractual entitlement can be paid at whatever is agreed between the organisation and their employees. If organisations don’t like the uncertainty, they may decide to designate furlough as a period during which no annual leave may be taken, at least until there is further guidance available. This may be more preferable, and easier to manage when it comes to making a claim under the CJRS.  Given that it is now possible to carry leave forward to the next two holiday years due to the coronavirus, businesses may be less concerned than they otherwise would be about workers having lots of annual leave to take in that leave year on their return from furlough.

Could businesses seek to enforce annual leave during furlough? Again, there is no official line on this but theoretically, yes. There may be an argument that this circumvents the point of annual leave in that the employee is already not working so organisations are denying them the ability to take it as a break from when they are working. That said, if the organisation is paying annual leave at 100 per cent of wages, the employee might be more willing to have time designated as annual leave if they would otherwise be on 80 per cent.

Some of the wording in this blog has been tweaked from the CIPD Inform website and if there is anything on here that you would like to clarify, please get in touch using the “Get in touch” button on the homepage.