Can I ask my staff to take holiday during furlough?
Update 14/05/2020: the government has published guidance confirming the advice below: https://www.gov.uk/guidance/holiday-entitlement-and-pay-during-coronavirus-covid-19#taking-holiday.
By now, we assume that the majority of employers who are going to use the Coronavirus Job Retention Scheme (CJRS) have done so. According to news reports almost 25% of employees are now on furlough.
We have kept an eye on the directions and guidance being issued by the Treasury and other government departments. What is still not clear is whether the purpose of the scheme is to attempt to save jobs, whether it is to provide a decent income for a large part of the population affected by the crisis, or whether it is to assist employers struggling to keep their businesses afloat. The answer to this question is essential. Whilst HMRC has started pouring money into employers’ bank accounts, they have clearly indicated that they may claw back this money if it is contrary to the exceptional purpose of the scheme.
This ambiguity is reflected in some of the most common questions we are being asked:
- Can you ask an employee to take holiday whilst on furlough?
- Termination and reengagement?
- When calculating the 80% wage, can you include past commission?
Before we start looking at these questions, below is a list of some of the governmental information on CJRS:
- The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction (15 April 2020)) which we will call the Directions. According to the employment law community, this document may need to be given precedence over other government websites should there be a discrepancy between the Directions and other documents.
- Guidance: Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme (employers’ CJRS guidance).
- Guidance: Check if your employer can use the Coronavirus Job Retention Scheme (employees’ CJRS guidance).
- Guidance: Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme (80% guidance).
- Acas: Coronavirus: advice for employers and employees (Acas guidance).
We are going to address the questions over three blogs, this first one is about holiday.
CAN YOU ASK AN EMPLOYEE TO TAKE HOLIDAY WHILST ON FURLOUGH?
This is actually two questions: can annual leave be taken during furlough, and can you force an employee to take their holiday during furlough?
Can annual leave be taken during furlough?
Up until 17 April 2020, all we knew about furlough, holiday leave and pay, was that the government had introduced a temporary new regulation allowing employees and workers to carry over up to four weeks’ paid holiday into the next two holiday leave years, “where … it was not reasonably practicable for a worker to take some or all of the leave … as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society).” (WTR 1998 Reg 13 (10))
It was widely believed that furlough was distinct in nature from holiday and that a period of holiday would interrupt furlough.
However, on 17 April, the Employees’ CJRS Guidance determined that workers could take annual leave during furlough. If an employee takes holiday whilst on furlough, their employer will be expected to pay 100% of their wages for the period of holiday but still be able to claim furlough pay in respect of that period. This is clearly a measure to assist struggling employers rather than saving jobs.
This can be very useful for struggling employers:
- It enables them to be reimbursed for a large proportion of the holiday pay instead of having to support the full cost of holiday pay, when the holiday is taken after the furlough. In effect, where employees’ wages fall below the £2,500 cap, the employer only has to pay for 20% of the holiday pay, and will be reimbursed for the remaining 80% through furlough pay.
- It enables them to have its staff ready to resume work when they are ready to reopen instead of having to deal with a backlog of accrued holidays.
Can you ask an employee to take a holiday during furlough?
There are two mechanisms which can enable an employer to require employees to take holiday whilst on furlough: a contractual right to do so or a statutory right to do so.
Many contracts of employment give an employer the right to impose holiday at certain periods. Some will restrict that right to the festive period or where there is an annual summer shutdown (very unusual these days), but other contracts may give more flexibility to the employer. It is worth checking what your contract says. You may also need to check what the furlough agreement said on taking holiday and you may need to agree a change to the furlough agreement with the employees concerned.
If the employer has not reserved the right to send their employees on holiday, they can rely on the Working Time Regulations which enables any employer to give notice of twice the duration of the holiday. For example, if an employer wants its employees to take one week holiday in May, it must give two weeks’ notice, so before 10 May 2020.
The Working Time Regulations only deals with the statutory holiday entitlement of 5.6 weeks, including bank holidays. You will have to rely on the terms of your contract for any contractual holiday entitlement over and above the statutory holiday entitlement.
The simple answer to these two questions leaves one unanswered fundamental question:
Can a holiday period taken during furlough be considered as a real holiday?
We have written many blogs about holiday leave and pay explaining that holiday was a health and safety right based on the principle that a human being needs rest and relaxation.
The quick fix offered by the government to employers wholly avoids the issue.
Could an employee refuse to take holiday on the basis that they will not be able to rest and relax under the current circumstances? Any such request will need to be dealt with carefully.
In summary, employees are able to take holiday during furlough and may also be compelled to take holiday but you would have to top up the 80% furlough pay to 100%, and that 20% cannot be recouped from the government.
There is also, as noted above, a danger that your employees might not view an enforced tour of their living room and kitchen as a suitable holiday and may therefore object to any suggestion regarding holidays. There is also a broader health and safety question that arises should employees agree to holiday requests during furlough, and then find themselves returning to work with no prospect of a substantial break for the rest of the year.
If you would like to discuss the options and potential pitfalls around this, or any other employment law subject, we would be delighted to speak to you.
For more specific information or to discuss your requirements please call either Amanda Galashan or Julie Calleux at Employease on 03339398741, or email us at email@example.com. This note does not constitute legal advice on any particular situation you may have.
Copyright: Employease 2020