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Covid-19 and Holiday Leave Management

Date: 16/04/2020 | COVID-19, Healthcare, Commercial Property, Corporate, Employment & HR, Dispute Resolution, Energy & Natural Resources, Environmental, Planning, Residential Development, Construction, Business & Professional Services

This is a stressful time for workers and employers alike.  One of the issues that employers are struggling to deal with is annual leave. 

Can an Employee be on Furlough Leave and Holiday Leave at the same time?

Yes, they can.

Employers may be tempted to have employees take holidays now due to the current situation.  The Government Guidance on the Furlough Scheme for Employers is silent on whether or not annual leave may be taken whilst on furlough. However, HMRC Customer Support have tweeted that annual leave may be taken whilst on furlough and it should be paid at full pay. The Government Guidance for Employee’s on the Scheme confirms that annual leave may be taken whilst on furlough and that Employers will have to top up employee pay and claim the 80% under the Scheme.

Taking holidays rather than putting an employee on furlough will probably have negative cash flow consequences for the Employer at this moment in time.

How can Employers manage Employees’ Holiday Leave?

The starting point is the employment contract or any collective agreement which deals with holidays. Usually the contract will provide when employees may take holidays, when they must take holidays (usually during workplace closures) and the process for requesting and approving holidays.

If you do not have provisions or policies covering either then it is still possible for the Employer to require an employee to take/or not to take holiday leave. This is best achieved through consultation with the relevant employees in advance and, where possible, agreement secured. There is always a risk of claims that an Employer is not acting reasonably in the circumstances. There will also be issues of consistency and fair treatment.

At the end of the day, especially in the current circumstances, the Employer can reasonably determine the issue on the provision of appropriate notice to the employee requiring the employee to take annual leave. Appropriate notice will depend on the particular circumstances of the case.

Changes to Holiday Leave Because of Covid-19?

A new regulation has been introduced to deal with part of the holiday entitlements that workers have under the Working Time Regulations. It deals with how these entitlements can be carried over into another holiday year, along with imposing requirements on employers if instructing workers not to take this leave.

The new regulations allow the first 20 days’ Holiday Leave to be carried forward and taken in the two annual leave years immediately after the one in which it was due to be taken if it was “not reasonably practicable for a worker to take” some or all of the 20 days’ leave to which the worker was entitled “as a result of coronavirus (including on the worker, the employer or the wider economy or society)”.   

Examples that ACAS have given are:

  • where workers are self-isolating or too sick to take holidays before the end of their leave year;
  • where the worker has been furloughed under the Coronavirus Job Retention Scheme (on which, see our article here)
  • where workers have had to continue working and could not take their annual leave entitlement

Again, whilst the Guidance of the Furlough Scheme is unclear it is our view that employees will continue to accrue holiday entitlement whilst on furlough. The Government will issue further Guidance on this and we will update when that is known.

This could result in a backlog of accrued holiday entitlement which could be practically and commercially difficult to manage.


Employers should consider carefully the financial and practical consequences of employees taking holiday leave at this moment in time. They should also consider the issues that may arise with the Government’s Furlough Scheme.

If you have any questions in relation to annual leave entitlement of employees or how to develop an appropriate strategy to deal with this issue across your business, please contact Alan Strain, our Employment Consultant.

The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers Stewart LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.

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