The impact of COVID-19 and furlough leave on annual leave

Following on from the recent government Job Retention Scheme, known as Furlough Leave, the government has now announced it is allowing workers to carry over up to 4 weeks annual leave into the next 2 leave years. The soon to be published The Working Time (Coronavirus) (Amendment) Regulations 2020 will amend the current law on holidays. It will allow workers to carry over holiday into the next 2 leave years where it is not reasonably practicable for them to take all of the holiday they are entitled to due to the coronavirus pandemic. It is only 4 weeks annual leave which can be carried over, so 20 days for full time employees. The balance of 1.6 weeks statutory leave, or 8 days bank holidays, will not be affected.

Why a change is being made

The change is aimed at allowing businesses, under particular pressure from the impacts of COVID-19, more flexibility to better manage their workforce whilst protecting workers’ rights to paid holiday. It will be interesting to see how this will work in practice and no doubt lots of requests are likely to be made particularly where the employer’s leave year is about to end.

The relationship between furlough leave and annual leave

The introduction of the furlough leave scheme and the large take up by employers will no doubt raise further questions on the relationship between furlough leave and annual leave.

The following issues are likely to arise:

1. Can an employee be on furlough and annual leave at the same time?

2. Can employers require employees to take their holiday during furlough leave?

3. Is holiday pay whilst on furlough leave based on 80% or 100%? – does it include commission and bonuses?

Furlough leave is an entirely new concept to employment law. However, it seems likely that the 5.6 weeks annual leave, under The Working Time Regulations, would continue to accrue during furlough leave. The position is similar to that of an employee on sabbatical for example.

The relationship between the employer and the employee

An employer could attempt to negotiate a change in contractual terms so that any annual leave over and above statutory leave does not accrue during furlough leave. However, this may make it less attractive to employees and it is not clear whether the employer is entitled to add extra conditions to furlough leave beyond a reduction in pay.

The coronavirus pandemic has led to a number of challenging questions regarding annual leave, furlough leave and indeed sick leave. Whilst the government has introduced legislation, it has been passed very quickly and it remains to be seen what loopholes can be exploited and challenged by both employers and employees.

Rest assured that we will be keeping on top of these developments and if you require further advice on this or any other employment related issue please contact Paul Grindley on 0113 320 5000 or email PaulG@winstonsolicitors.co.uk