Furlough and annual leave

Since the government announced the Coronavirus Job Retention Scheme, questions have been raised regarding how furlough and annual leave interact.

The government did not initially issue guidance on this point and contradictory views have been given. However, yesterday brought long-sought clarification on this issue.

The government updated its guidance to state that employees can take holiday leave whilst on furlough leave.

Employees are entitled to their usual holiday pay for holidays taken whilst on furlough in accordance with the Working Time Directive and the Working Time Regulations. If employers are paying employees at 80% of wages during furlough, employers will be obliged to top up amounts over the grant to full normal pay for any holiday days.

With regards to bank holidays, the guidance states that, if the employee usually works bank holidays, the employer can agree that this is included in the grant payment. If the employee usually takes bank holidays, the employer will either have to top up to their usual holiday pay, or give the employee a day of holiday in lieu.

The government’s policy approach on annual leave and furlough remains under review, but this brings long-awaited clarification to employers across the country.

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Verity Buckingham

About Verity Buckingham

Verity is experienced in all aspects of employment law and corporate immigration matters. She deals mostly with corporate clients advising on contentious and non-contentious employment matters. Verity's contentious practice includes defending claims in the Employment Tribunal and experience of Employment Appeal Tribunal litigation in relation to claims of unfair dismissal, discrimination, equal pay and whistleblowing.

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