Furlough Scheme and Holidays

Given furloughed employees are doing no work for their employers at the moment, the matter of holiday entitlement has been of interest to many. The government has now released guidance on how holidays and the furlough scheme interact with one another. This guidance can be found here.

In the UK, the statutory holiday entitlement is 5.6 weeks per year. It is possible for employment contracts to grant additional holiday beyond this, but this is the absolute minimum. The number of days holiday arising will be based on the number of days worked in an average week. It can include UK bank holidays when these fall on what would normally be a working day for each employee. Whilst on furlough, employees continue to accrue holiday at the same rate they would normally.

It is possible for workers to take holidays whilst on furlough without breaking the furlough period. It is still possible for the employer to claim 80% of wages for holidays taken in accordance with the furlough formula. However, the employee must be paid 100% of their wages for any days classified as holidays.

A number of employers have expressed concern that employees will not take holiday during furlough. This would leave them in the position of risking staff shortages at a later date, through many staff having higher holiday entitlements late in the year than normal. There are two main ways of addressing this issue. As specific employment contracts can alter the provisions, subject to statutory minimums, legal advice is recommended before taking any action on these.

  • Require employees to use some of their holiday time during furlough. The details of the statutory minimum notice periods are included in the guidance linked above.
  • Carry forward leave at the end of the holiday year. Normally this would be restricted to 1.6 weeks of the entitlement which could only be carried forward into the next year. Special legislation has been enacted to allow holiday to be carried forward up to 2 years. This applies when the current crisis rendered it not reasonably practicable to take holiday in time. The guidance linked above gives examples of what would qualify as not reasonably practicable.