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The impact of Covid-19 and Furlough leave on holiday entitlement

Let’s look to a much happier time (hopefully soon) when we have seen the back of COVID-19 and we are once again allowed to stand closer than 2 metres, can enjoy a barbecue with our friends and family and can make plans for a family holiday – we will all deserve a break by then but how will business cope with the explosion of holiday requests that are likely to happen in short order?

Very few (if any) employees will be asking to take holiday whilst the coronavirus pandemic persists, with the obvious consequence that they will have significant accrued but untaken holiday, which many will wish to take before the end of their leave year (typically a calendar year) and/or will wish to carry over to their next leave year. This insight is focused on statutory annual leave under the Working Time Regulations 1998, but the same considerations and questions will apply to contractual holiday entitlement.

Statutory annual leave – the current legal context

• Employees are entitled to 5.6 weeks’ paid holiday each year (equivalent to 28 days for a full-time worker).

• Generally, statutory holiday may only be taken in the leave year in respect of which it is due – in other words, an employee must take their statutory holiday entitlement during their leave year.

• There is no general right for an employee to be able to carry forward unused holiday into the next leave year

• If an employee is on long-term sick leave, they can carry over 4 weeks’ paid holiday (unless their employer allows more to be carried over) but it must be used within 18 months of the date it carried over from

• Employees must give notice to their employer if they wish to take statutory holiday. The notice must be at least twice the period of leave that they are requesting.

• Employers may require a worker to take (for example at Christmas), or not to take (for example during busy periods), holiday on specific dates. This gives the employer, in effect, absolute discretion over when holiday may be taken by an employee within the relevant holiday year provided it gives the required notice (such notice must be at least twice the length of the period of leave that the employee is being required to take)

• Employers do not have the right to deny an employee’s holiday altogether (even with a payment in lieu) or to defer it beyond the end of the leave year

• An employee can bring a claim in an Employment Tribunal that their employer has refused to permit them to exercise their right to statutory leave. In such circumstances, the Tribunal must make a declaration, and may award such compensation to the employee as the Tribunal considers just and equitable.

IBB Insight

• The Government/the EU could decide to temporarily relax the current regulations and allow employees to carry forward unused holiday into the next leave year and/or allow employers to deny or defer holiday this leave year. However, with Government focus on the now it may not consider this until the potential holiday explosion is already upon us

• Employers should consider consulting with their employees now about temporarily changing holiday policies and contractual holiday terms to allow greater flexibility with carry over, deferment and to require their employees to take some holiday during specified times during the lockdown period.

• When considering any changes to holiday arrangements employers will need to continue to be aware of the health and safety implications – workers will still need to be given time off to stay safe in the workplace – careful thought will need to be given as to how to achieve the right balance within the regulations as they currently stand

• Be aware that there could be a risk of a claim for breach of the implied term of mutual trust and confidence if an employer forces an employee to take holiday during the Government imposed lockdown period – such a claim may be based on an argument that the employer is acting unreasonably in forcing holiday to be taken at a time where the employee is not able to reasonably rest/enjoy themselves with their family – genuine consultation with employees should largely reduce this risk.

• “Furloughed workers” will continue to accrue holiday entitlement during the furlough leave period. However, as a matter of policy, it is possible that the Government could ultimately decide that holiday does not accrue to help alleviate the potential holiday problem identified in this insight

• It is anticipated (but not yet definitive) that employers should be able to require employees to take holiday during furlough leave provided that it gives the required notice (such notice must be at least twice the length of the period of leave that the employee is being required to take).

• Employees who follow Government advice to stay at home and who cannot work as a result are eligible for statutory sick pay (SSP), even if they are not themselves sick – following this logic through, such employees are arguably on sick leave and therefore could already be entitled to carry over accrued but untaken holiday to the next leave year.

It is critical that both employers and employees work together and be bold in their thinking. Employees will have to recognise that their employers will not be able to permit everybody to take holiday at the same time. Employers will have to recognise that employees will need a break with their families when we are released from lockdown.  Now more than ever, promoting open and caring workplace communications and really listening will achieve the positive workplace outcomes we all need and want.

For further information please contact IBB Solicitors’ specialist employment law team today.

The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

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