2020 Holiday Entitlement - Business Update Working Time Directive (Coronavirus) (Amendment) 2020

With the UK in lockdown, your employees may not have been able to take their full holiday entitlement. The Government has released guidance which allow a full-time employee to carry over a maximum of four weeks leave over the next two leave years.

This is to be done at the discretion of your business and in agreement with the employee.
The Government’s job retention scheme has also seen unprecedented numbers placed on furlough across the UK. A furloughed worker is still entitled to their full leave allocation. In these circumstances the employee can request annual leave during furlough and this is to be paid at the full rate and deducted from their annual leave entitlement.

On 26 March 2020, the Government announced the Working Time (Coronavirus) (Amendment) Regulations 2020.

The amendment states that where it was ‘not reasonably practicable’ for a worker to take some, or all, of the leave to which they are entitled as a result of COVID-19, the worker may carry forward up to four weeks untaken leave during the next two leave years. Employees must still take at least 1.6 weeks (8 days for full-time employees) in the current holiday year.

This amendment has been mainly focused on key workers that have been unable to take time off; however, as the amendment is applicable to all workers, it is essential organisations understand this change and how it affects them.

If you feel that you will not be able to provide workers with full holiday entitlement this year due to COVID-19, you may wish to inform workers of how much leave you are permitting them to carry over and the rules (if applicable) around taking it within the next two years. However, you must still encourage workers to take as much leave as possible in the current year.

Example: Business A has had an increase in work due to COVID-19 and will authorise up to 10 days to be carried forward to 2021 and 2022. They are going to stipulate that up to 5 days can be taken in 2021 and the following 5 days in 2022 to reduce the likelihood of too many staff on holiday at any one time.

Employers’ Rights and Holidays

If you have encouraged your workers to take holiday but you are still seeing a large number of holidays unbooked and/or workers refusing to book them, you may provide workers with notice to take holiday at certain times, but this should be as a last resort.

If you need to take this course of action, you must provide a worker with more than double the length of notice compared to the length of holiday you are requesting them to take.
If a business is struggling to provide holiday, you may also provide notice to cancel a booked holiday and must provide notice of at least the same amount of time off that the worker is taking.

Example A: All workers are to be required to take a week’s holiday during July 2020.
This business must inform all workers of this by 15 June to ensure that at least two weeks’ notice has been provided.

Example B: A worker has a week’s holiday starting on 15 June 2020 and, due to high workload, the business requires them to cancel the holiday.

This business must inform the worker of their plan to cancel this holiday on or before the 5 June to ensure a weeks’ notice has been provided.

Holiday and Furlough

A large number of UK businesses have placed workers on furlough, but if workers are on furlough, what happens to their holiday?  All furloughed workers continue to accrue their normal holiday entitlement. Therefore, no amendments in workers’ entitlement should be issued due to a period of furlough, no matter how long the workers were on furlough.

The Government has confirmed that workers can continue to take holidays while on furlough. This will not disrupt their furlough status and applies to any Bank Holidays that are due during a period of furlough. The worker should request and book holidays in the normal method, where possible; if it is not possible, the business should communicate how workers should request and book holiday while on furlough.

Holiday pay during a period of furlough can be confusing. It is important to understand that holiday pay is a contractual right and all workers should receive their normal holiday pay, whether the worker is on furlough or not. All workers’ holiday pay should be equivalent to a normal day’s full pay. If the worker’s hours and salary are fixed, this is a simple calculation. If a worker’s hours are not fixed because they have variable hours or pay, their holiday pay must be calculated as an average of the previous 52 weeks of pay (ensuring to exclude any weeks there was no pay).

Taking Holiday

If you can facilitate workers taking normal holidays, you may wish to encourage all workers to continue to book and take holidays throughout the year and during their period of furlough, if applicable. This can be completed in a number of ways such as an announcement to all workers to encourage them to have taken a certain percentage of holidays by the end of June/July and also ensure that a percentage of holidays have been booked throughout the year (i.e. take 35% before the end of June and have 65% booked and allocated for the full year). This will help avoid workers having most of their holiday left to use in the latter half of the year.

It is also important that when you are planning your business and people strategy for post COVID-19, you should take into account the potential for a busy period and inform workers that during this period of high activity, holiday requests may be declined. This may coincide with workers wishing to take that last-minute holiday and trip as the UK eases lockdown, so it is important to set expectations as early as possible.

Please do bear in mind that CHO does not assume any responsibility for any specific member company. Our updates are for information and guidance purposes only. It is the case that each and every member company must always take their own independent advice in respect of the specific circumstances that apply to their company.

FAQs

Q. What does the Government mean by ‘not reasonably practicable’?
A. When reviewing if it was/was not reasonably practicable to allow workers to take holiday, the business may wish to consider the following points: Has the business faced a significant increase in demand due to COVID-19? Would the worker taking leave impact wider society’s response to COVID-19? Is there a reasonable amount of time for the worker to take the outstanding leave later in the working year? Can the remaining workforce provide suitable cover?

If your business answers ‘Yes’ to the first two questions and ‘No’ to the last two questions, it may not be practicable to allow your employees to take their full holiday entitlement in 2020; however, if the opposite applies, your workers should have had ample opportunity to take their holiday entitlement and therefore may not need to carry any additional holidays over to 2021 and 2022.

Q. Can bank holidays be included in the 4 weeks?
A. Yes, they can, as all workers are entitled to 5.6 weeks holiday in total. While this is normally broken into 4 weeks’ normal holiday and 1.6 weeks’ bank holidays it does not have to be assigned in this way.
If a worker cannot take any bank holidays due to COVID-19 they must be allowed to take the holiday later in the year or it may be included within the 4 weeks carried over.

Q. If any worker has outstanding holiday at the end of the year, do they automatically get to carry it over due to this amendment?
A. No. If a worker has had a reasonable opportunity to take all their holiday in the current year, the amendment does not apply. It is also important to note that workers are still required to take as much holiday as possible throughout the year, despite the difficulties we have faced.

Q. A lot of workers have cancelled their holidays for the Spring and Summer and are hoping to re-book later in the year when travel might be a little easier. Could this cause problems?
A. As the UK emerges from lockdown and the economy restarts, businesses may need all their workforce available and ready for work. If your business experiences a sudden increase in demand, it may come at the time when employees want to take a late holiday, leaving you with a significant demand for time off at the same time as increased demand for company’s services/products. You may have to refuse holiday requests or be unable to meet business demand, leaving workers upset and with outstanding holiday they cannot use.

Allowing a certain percentage of unbooked holidays for each worker is always acceptable, but as an employer you should ensure workers take their allocated leave throughout the year to allow them time to relax and unwind. This does not have to be a trip but can simply be staying at home and spending time with their family.

Q. If a worker is on furlough and takes holiday, do I still claim furlough for this day?
A. Yes, for any worker that has a period of holiday or bank holiday while on furlough, you can and should still claim for these days under the Coronavirus Job Retention Scheme (CJRS). You would then ensure that in line with their contractual holiday pay, they are paid in full for these days.

Example: Employee A was on furlough from 1 May to 31 May and had a week’s holiday from 11 May to 15 May, the business was not topping up their salary.
The worker will receive the normal 80% (to a maximum of £2,500 per month) CJRS payment for the month and for the 2 bank holidays and 5 days’ holiday their employer must top up the payment to ensure they get the equivalent of 100% of their normal pay (80% from the Government and 20% from the business). These 5 days’ holiday and 2 bank holidays are classed as being taken and no further compensation needs to be provided.

Q. What if my workers are getting 100% pay during furlough and do not want to take holiday?
A. This may not be as easy to handle because when workers are receiving only a percentage of pay, it is easier to encourage them to take holiday as it will top up their salary, but with the workers that are already receiving full pay, there is no such incentive. With these employees you may need to provide them with notice to take holidays or provide clear rules and guidance on holidays as detailed below.

Q. Is it acceptable to have different guidance for people that are still working compared to furloughed workers?
A. We would encourage you to treat all your workers fairly, as providing different guidance for some workers may result in claims for unfair treatment. However, if you have a strong business reason to implement different guidance to certain departments or groups of people this may be suitable. This should be actively communicated to ensure workers understand why you are implementing different rules.

Example: The manufacturing/shipping department has seen a high demand in work due to COVID-19 while the admin teams and supportive functions have had limited work and as a result been furloughed. Therefore, the business is asking all admin and supportive functions to take a percentage of holidays throughout the year but may require the manufacturing/shipping team to carry over holiday to 2021 and 2022 due to the demand on services in this area.