Coronavirus Job Retention Scheme – your holiday questions asked

Published by Chay Took on 24 April 2020

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Last updated 24 April 2020

Sarah Brockhurst, an employment lawyer at Knights plc, and Chay Took, a partner at Kreston Reeves answer your questions on the Coronavirus Job Retention Scheme.

The Coronavirus Job Retention Scheme (CJRS) offers employers the ability to furlough staff and apply for a grant to cover 80% of their salary up to £2,500 a month. The Scheme opened to employers from 20 April.

Government guidance on the CJRS is being updated regularly, but many questions remain unanswered – the treatment of holiday is one such area. Employers are in the difficult position of having to act now without full knowledge of the consequences of those actions.

Here, we answer questions about furloughed staff and holiday pay. We recommend you take advice before taking any action, especially given the Government’s guidance issued on 17 April 2020 expressly states that the policy on holiday pay during furlough is being kept under review, which would suggest further changes may follow.

Does holiday continue to accrue whilst staff are furloughed?

Furloughed staff remain employees with all the protections afforded to them. This means that annual leave continues to accrue as set out in employment contracts.

Can staff take holiday whilst being furloughed?

Yes they can. Staff on annual leave should be paid their normal (100%) pay and not the lower furloughed rate of 80% (capped at £2,500 a month). This might be an attractive option for staff that earn over £2,500 a month but will mean that the employer has to fund this in part.

Employers will need to give thought to how they are going to deal with bank holidays, given there are four in the months of April and May. If they are usually included in an employees’ holiday year, employees should receive their full rate of pay for these days or alternatively they should be allowed to carry forward an additional day to be used after their period of furlough leave has ended.

We have furloughed staff because we cannot afford to pay them. Can we refuse holiday requests, particularly from those that earn over the £2,500 cap?

Yes you can, but it is important that employers treat all of their employees in the same way. If employers treat employees differently it may leave them vulnerable to claims in the employment tribunal.

Does the CJRS allow employers to claim pay for staff who do take holiday?

Whilst the current guidance issued by the Government does not explicitly confirm this, it would appear that employers can claim pay for employees who do take annual leave during furlough leave, up to the usual 80% or £2,500 a month. Whilst there will be a balance for the employer to pay for the employee to receive their full rate of pay, for those employers wanting to allow employees to take annual leave it would appear to be a way to do this without the employer having to exclusively cover these costs.

Can we direct staff to take all of their holidays now?

Unfortunately, the question of whether an employer can direct an employee to take annual leave remains unresolved at this time. We believe that it would be possible, but again all employees should be treated consistently. It would be necessary for an employer to give staff notice which is at least double the amount of annual leave that the employee is being asked to take.

But, a note of caution. It could be argued, and quite compellingly, that such a direction to use all of their annual leave for the current leave year would be unreasonable and would leave employers open to potential claims in the employment tribunal.

Can we force staff to take holiday that has been accrued whilst furloughed?

This would seem a sensible approach by employers for those willing and able to top up employees’ pay to their full rate of pay. The benefit to the employer is that staff do not return to work with a significant amount of annual leave to take at a time when their employers are likely to need them the most to get their business up and running again. Employees are broadly understanding of the position their employers are in, and if treated fairly and consistently it is difficult to see this being a problem.

How long can staff carry over their holidays?

Legislation has been amended to allow employees to carry their statutory holiday over for up to two leave years if it is not reasonably practicable for them to take it due to the coronavirus. We would, however, urge business owners to consider the implications of this entitlement. Business owners may be storing up future problems by having to compensate staff for annual leave that has not been taken, having a large number of staff on annual leave at the same time or staff frequently being out of the business.

If you would like to discuss the Coronavirus Job Retention Scheme, you can contact Chay Took here.

Sarah Brockhurst is an Associate in the employment team at the law firm Knights plc (following the recent acquisition of asb law LLP).  She can be reached by e-mail here.

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