Stephen Morrall and Amanda Lathia examine coronavirus and postponement of holiday entitlement

Coronavirus and Postponement of Holiday Entitlement

Given the enormous impact of Coronavirus on our lives at present, including the thwarting of holiday plans, the government has announced that it will allow some holiday entitlement which cannot be taken because of the effects of Coronavirus to be carried over into the next two holiday years. This will be of benefit to employees who would prefer to take their holidays when travel restrictions are lifted and they can leave their houses. It will also be of benefit to employers in managing the return to normal working arrangements after Coronavirus restrictions are lifted and avoid all their employees requesting holidays in a short space of time.

In order to do this, the government has amended the Working Time Regulations 1988 to allow workers to carry over up to four weeks’ holiday (20 working days) into the next two holiday years.  Regulations were published on 26th March 2020 under which leave which cannot be taken in the current holiday year can be carried forward and taken in 2021 or 2022.  The new regulations only apply to the basic 20 day holiday entitlement and do not apply to the additional 8 days holiday to which a worker is entitled under the Working Time Regulations.

The right to carry over only applies where it has not been “reasonably practicable” for a worker to take some or all of this leave “as a result of the effects of Coronavirus (including on the worker, the employer or the wider economy or society)”.

An employer may only require a worker not to take the carried forward leave on particular days “where the employer has good reason to do so” (the phrase is not explained).   This is a modification of the normal rule that an employer can require a worker to take leave or not take it on particular days by giving the required period of notice (see below).

In essence:

1. Employees can apply for holiday in the normal way; but
2. Subject to anything in the contract of employment the employer can also require them to take carried over holiday days at times that suit the employer either in response to a holiday request or if it decides that they should take holiday at a particular time, provided that there is “good reason to do so”.  There might, for example, be “good reason” to ask employees to take holiday during this period of lockdown when they have less to do.
3. If a person leaves employment with carried over holiday entitlement, they must be paid in lieu.
4. It is not possible to make a payment in lieu of statutory holiday during employment, but an employer could agree with an employee to accept a payment in lieu of additional contractual holidays (over 28 days p.a.) in order to prevent the carry forward of too much holiday into the following year.

Can an employer cancel holidays or require employees to take holiday?

Under regulation 15 of the Working Time Regulations, employees must give notice to their employer to take holiday and employers must give notice to employees if they want to require them to take annual leave. In either case, the notice period must be at least twice the period of annual leave being requested by the employee or being required to be taken by the employer. While these requirements may be honoured more in the breach than the observance by employees, and not used very often by employers, they may acquire more importance in these days of Coronavirus as a way of managing holiday absences.

For example, if the employer wants to close its business for 2 weeks during which its employees should take holidays, they should give employees at least 4 weeks’ notice.  ACAS guidelines state that the above could affect holiday already booked or planned, thus employers should:

• explain clearly why they need to close; and
• try and resolve anyone’s worries about how it will affect their holiday entitlement or plans.

Under regulation 15, an employer can also refuse an annual leave request or retract consent to take booked annual leave and require the employee to take it later. The notice period in this case must be at least the same as the period of leave being refused.  As mentioned above, if the leave to be taken is carried over for reasons due to the effects of Coronavirus, the employer can only refuse a holiday request “if there is good reason to do so”.  If no reason can be established, a refusal may be a breach of the implied term of mutual trust and confidence.

However, given the current travel restrictions as advised by the government, this may be a useful measure either to help with workflow and capacity, by staggering annual leave, or to deal with reduced demand for work as Coronavirus reaches its peak in the coming weeks.  Where possible, leave should be taken by agreement.

Holidays for furloughed workers

There is no government guidance on holidays for furloughed workers.  The Job Retention Scheme guidance says that “employees that have been furloughed have the same rights as they did previously” which suggests that holidays continue to accrue during any period of furlough. The extent to which furloughed workers can be required to take holiday during a period of furlough, or what pay they might be entitled to if they can take holiday is not addressed.  However, taking the quotation at face value, the furloughed workers continue to accrue holiday in the normal way.  If they want to take a holiday, they can apply for it and they would be paid at their normal (not reduced) rate.

Holiday policy

We are recommending that employers develop a policy on holidays in order to ensure that holiday entitlement can be managed effectively over the next two to three years.

Clearly the disruption to normal business at present means that employers will want to ensure that, when Coronavirus restrictions are lifted, they can hit the ground running. Encouraging staff to take advantage of the extended period in which to take this year’s holiday entitlement should help to ensure that staff are available when needed later this year. On the other hand, building up too much holiday entitlement that then needs to be taken in future years may cause staffing problems.

Employers should consider a combination of approaches. One would be to require employees to take their statutory holiday on specific dates by giving appropriate notice as explained above. Another would be to offer payment in lieu of additional contractual holidays above the statutory holiday entitlement. Much will depend on the size and nature of the business and the strength of the employer and employee relationship but it may be that having a dialogue with employees about the challenges that the business is facing and the need to ensure sufficient staff levels at all times will encourage employees to make reasonable and informed holiday requests.

If you would like to discuss your particular circumstances, please contact Stephen Morrall on 020 7412 5107 or stephen.morrall@hunterslaw.com.