To ask the Chancellor of the Exchequer, what limitations are placed on holiday entitlement for people who have been on furlough.
17 May 2021
Employees can take holiday while on furlough. If an employee is flexibly furloughed, then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.
Employees should not be placed on furlough for periods simply because they are on holiday. This means that employees should only be placed on furlough because their employer’s operations have been affected by the coronavirus pandemic and not just because they are on paid leave. This also applies during peak leave periods such as late December and early January.
Existing legislation means that furloughed employees continue to accrue leave as per their employment contract. The employer and employee can agree to vary holiday entitlement as part of the furlough agreement. However, almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below; for workers who work a five-day week, this amounts to 28 days each year.
Working Time Regulations (WTR) require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay them their usual holiday pay in accordance with the WTR. Employers will be obliged to pay additional amounts over the CJRS grant, although they will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period.
If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their pay to their usual holiday pay, or give the employee a day of holiday in lieu.
During this unprecedented time the policy on holiday pay during furlough is being kept under review.