On 13 May 2020, the Government published guidance on holiday entitlement and holiday pay during the coronavirus (COVID-19) pandemic.
It should be noted that this is guidance only. It has not been approved by Parliament and it has no legal effect. The Employment Tribunal will continue to apply the law based on the Working Time Regulations and the associated case law.
The Guidance has provided some helpful clarifications. For example, it confirms that those who are furloughed under the Coronavirus Job Retention Scheme continue to accrue annual leave under the Working Time Regulations 1998 and are able to take annual leave without terminating or interrupting the furlough period.
In other respects, and not unsurprisingly given the variety and scope of the issues that arise, there remain plenty of room for debate.
Employers requiring workers to take holiday
As always, employers can require their workers and employees to take annual leave. Employers have to give the correct notice, which depends on the length of period of leave, in advance of the leave period. The minimum notice period is two times the length of the leave. For example, if the worker is required to take five days of annual leave, the employer must give at least 10 days’ notice.
The Guidance states that such requirements can be placed upon furloughed workers as well, but advises that employers “should consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday”.
The European Court of Justice has emphasised on numerous occasions that the purpose of annual leave is to enable the worker to enjoy a period of rest, relaxation and leisure. In light of the above guidance and the current ‘lockdown’ restrictions and social distancing, it could be said that no-one can properly enjoy their leisure time.
In Sumsion v BBC Scotland UKEATS/0042/06 the Employment Appeal Tribunal acknowledged that statutory annual leave cannot be taken on days on which workers are not obliged to make themselves available for work. Would the same not apply to those who are furloughed? Not only are furloughed workers not obliged to make themselves available for work, they are strictly prohibited from doing so.
The observations of the EAT in Sumsion v BBC were in the context of employers abusing the annual leave provisions by nominating weekends as leave days when there was no prospect of the worker ever working at weekends and as such not really providing leave at all.
The Supreme Court in Russell and others v Transocean International Resources Ltd and others [2012] IRLR 149 approved the comments in Sumsion v BBC but also said that annual leave could be taken or required to be taken outside of contracted working hours provided they were free from all employment duties.
Notwithstanding the difficulty of genuinely enjoying one’s leisure time at the moment, it is unlikely to be an abuse for an employer to require furloughed employees to take some annual leave when furloughed. However, there is a fine line. If an employer arbitrarily uses the furlough period to simply deplete an employee’s annual leave, this could well amount to abuse.
An employee who is forced arbitrarily to take annual leave during their furlough period, could bring a claim for breach of the Working Time Regulations if, when they subsequently return to work, they are refused a request to take annual leave. By way of illustration, if an employer requires them to take 15 days’ annual leave now, an employee who considers this to be an abuse could claim they are still entitled to those 15 days of leave when they return to work and, if a request to use those 15 days is refused, they can bring a claim.
Holiday pay
If a furloughed employee is taking annual leave it is important that they are paid the correct amount and this may be higher than the rate of pay that applies for the furlough period. This is because holiday pay including overtime, allowances, commission payments, and bonuses so that the worker is no worse off financially when taking annual leave compared with when they are at work. Conversely, the Coronavirus Job Retention Scheme excludes commission, fees, and bonuses from the amount employers can claim back from HMRC
Carrying over annual leave
The Working Time (Coronavirus) (Amendment) Regulations 2020 allows for workers to carry over 20 days of annual leave into the next two years where it has not been “reasonably practicable” for them to take that leave due to the effects of coronavirus pandemic. The additional 8 days of the statutory annual leave entitlement cannot be carried over under the Regulations so it will be up to employers and their workers to reach agreement as to how many days above and beyond the 20 will be treated.
The Guidance states that employers should do everything reasonably practicable to ensure that workers are able to take as much of their leave as possible in the year to which it relates.
The Guidance covers when it may not be reasonably practicable for a worker to take annual leave and points towards circumstances such as where there has been a significant increase in demand at work such that the worker has had to continue to work, the inability of an employer to provide cover for a worker might otherwise be on leave, and the health of the worker.
Even though, in practical terms, people cannot currently go abroad or even take a holiday somewhere in the UK, being furloughed is unlikely to pass the test of it not being reasonably practicable to take annual leave. The Guidance states that “Workers who are on furlough are unlikely to need to carry forward statutory annual leave, as they will be able to take it during the furlough period”. That is certainly true if a worker decides themselves that they want to take annual leave, but otherwise one comes back to the issue of whether it’s possible to enjoy a period of rest, relaxation and leisure.