Furlough leave and holiday: what we do and don’t know

As many independent schools are now making use of the government’s Coronavirus Job Retention Scheme (CJRS), a number of questions remain unanswered in respect of its interaction with annual leave entitlements.

The position in this regard remains unclear and is not addressed in the latest version of the government guidance released on 4 April 2020. The following provides an overview of what we know (and what we don’t) as at 9 April 2020.

Does annual leave continue to accrue during a period of furlough?

Yes, an employee’s holiday entitlement will continue to accrue during furlough leave.

Schools could attempt to negotiate a change in contractual terms such that any annual leave over and above the statutory leave entitlement (5.6 weeks) does not accrue during furlough leave, but it is not clear whether an employer is entitled to add extra conditions to furlough leave under the CJRS, beyond a reduction in pay.

Can an employee take holiday during a period of furlough leave?

This remains unclear.

ACAS have recently published advice for employers and employees on Covid-19 which states:

“If an employee or worker is temporarily sent home because there’s no work and the employer intends to claim for their wages under the Coronavirus Job Retention Scheme (furloughed), they can still request and take their holiday in the usual way. This includes bank holidays.” It further notes that “employees and workers must get their usual pay in full, for any holidays they take”.

This is, however, yet to be clarified in the government guidance.

An employer does have the right to require an employee to take statutory holiday on particular days, provided it gives twice as much notice as the length of the holiday to be taken (e.g. two weeks’ notice for one week’s leave).

We currently expect that it will be possible for employers to exercise this right and to require an employee to take statutory holiday during a period of furlough leave, but we are awaiting further guidance in this regard from the government. It is also not clear, if this is allowed, how a period of holiday will interact with the provision of the grant.

We would recommend that schools hold off on requiring any employee to take holiday during furlough leave until the position is clarified by the government. We expect updated guidance in this regard imminently. If it is allowed, schools may wish to make use of this right in certain circumstances to avoid an employee building up large amounts of accrued leave during a period of furlough and taking it shortly after schools are reopened.

What about term-time only staff?

As per staff working year round, term-time only staff will continue to accrue holiday during a period of furlough leave.

The issue with staff accruing leave and then needing to use it shortly following the school reopening is, however, unlikely to be as relevant to term time only staff. This is based on the argument that they will have already taken (or will be able to take) most, if not all, of their 5.6 weeks’ statutory holiday for the year within the school holiday periods, falling outside of the current period of closure.

This assumes, however, that the contract of employment clearly provides for term time only staff to be entitled to the statutory minimum holiday entitlement to be taken within the school holiday periods.

What if an employee is unable to use their holiday entitlement for the year due to the pandemic?

Save for in certain circumstances, employees are not generally entitled to carry over statutory holiday from one holiday year to the next.

The government, however, is set to amend the Working Time Regulations (Regulations) to allow employees to carry over up to four weeks of unused annual leave (i.e. leave under the Working Time Directive) into the next two leave years, if it is not “reasonably practicable” for them to take some, or all, of the holiday to which they are entitled, “as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society)”. Detail has not been provided on how to determine when coronavirus means it is not practicable to take holiday, but we anticipate that this is likely to be a low hurdle to overcome.

As well as extending the carry-over period, the change means that:

• If a worker’s employment or engagement is terminated during the two-year period, any payment in lieu of holiday must include a payment in lieu of holiday carried over under these provisions.
• Employers continue to have the right to refuse permission for a worker to take leave on particular days (provided they give notice which is at least as long as the holiday requested). However, under the new Regulations, they can only exercise this right where there is “good reason to do so”.

Advice and support

As outlined above, the position in respect of furlough leave and holiday remains largely unclear. We would not recommend that a school requires an employee to take holiday during a period of furlough leave until further guidance from the government is forthcoming and without seeking specific legal advice.

We will of course continue to keep schools updated in this regard.