It’s nearly Easter weekend, although we’re sure that has passed many by given the groundhog nature of life at the moment.
However, bank holidays are scheduled on 10 and 13 April 2020 (and there are a couple more in May too). In relation to employees who have been furloughed, this gives rise to two questions:
Can an employee on furlough also be on holiday?
If they can, what should they be paid?
Government guidance has been strangely silent on the issue of holiday and furlough—probably because holiday has become an extremely complex topic in light of European principles and case law.
However, we’re going to try to give you straightforward answers that reflect what we consider to be the most likely position. Please note that there will be many nuances in light of individual terms of employment and working arrangements, but below we address the broad principles.
Bank holidays are usually part of the legal minimum 5.6 weeks’ paid holiday. Employees and workers must get their usual pay for bank holidays.
Employees and workers may still be required to use a day’s paid holiday for bank holidays, including when they’re furloughed. If bank holidays are given on top of the 5.6 week’s paid holiday, employees and workers should check their contract or talk to their employer about taking this holiday.
This seems to indicate that an employer may still expect an employee on furlough to treat the bank holidays as a day of annual leave (i.e., and not have the holiday rolled forward). Many employment contracts are already drafted on the basis that bank holidays will be taken as holiday.
What about other annual leave?
UK law doesn’t differentiate between bank holidays and any other holiday. Therefore, if a bank holiday is treated the same as other day of annual leave as a matter of law, it looks in principle as though an employee can be on furlough and annual leave at the same time without breaking the furlough period. The ACAS Coronavirus guidance includes this further statement:
If an employee is ‚furloughed‘ (temporarily sent home because there’s no work), they can still request and take their holiday in the usual way. This includes taking bank holidays.
However, employers should be measured about requiring employees on furlough to take holiday during the furlough period. An employer can be found to have abused a worker’s right to holiday by requiring holiday to be taken in circumstances where it effectively deprives the worker of free choice in the matter.
Therefore, while it would not seem to be an abuse to require holiday to be taken on the bank holidays, it might well be an abuse to require other (or an excessive amount of other) holiday to be taken during furlough.
Employers will no doubt be expected to use the new facility that allows 20 days holiday to be rolled forward over the next two holiday years in preference to requiring employees to run down holiday during furlough.
What should furloughed employees be paid for holiday?
Case law has made clear time and again that an employee’s statutory holiday pay should correspond to normal remuneration based on periods of actual work. It must not be based on or take account of periods of non-working.
The application of this principle would mean that an employee taking holiday, including a bank holiday, while on furlough should be paid their “normal remuneration” based on what they’d be paid if they were working as usual on those days.
Given the protectionist approach that courts have taken to the issue of holiday to date, there is currently no reason to think that this fundamental position will change. This is particularly the case given the new facility to allow core holiday to be rolled forward over two years.
For employers that are paying 100% pay during furlough, the answer is easy. Just pay as usual.
For those that have reduced pay during furlough to the amount that can be reclaimed under the Job Retention Scheme, it’s trickier. The options are:
Pay full normal pay for bank holidays. That is, if your payroll can cope with it.
Stay silent on the issue, and wait until the government clarifies the issue. Any shortfall in pay can be made up at a later date, if necessary. Tell any employee who raises the issue that that’s what you’re doing.
Flag the issue to employees on furlough and say that you are awaiting clarification and any rectification will be, of course, made.