Furlough Leave – Taking Annual Leave

Last updated: 11th May 2020

Watch our latest video explaining more about the Furlough Leave scheme.

We have had many queries regarding whether employees are able to take annual leave during a period of furlough leave.

The HMRC guidance indicates that employees can take annual leave during a period of furlough and can still claim 80% through the Job Retention Scheme (JRS). However, it also states that employees must be paid holiday pay in line with the Working Time Regulations (WTR).

The WTR requires that annual leave must be paid at an employee’s normal rate of pay or (where pay varies) calculated based on an average week’s pay over the previous 52 weeks. Therefore, if an employee is to take annual leave during a period of furlough, the employer will be required to top up over and above the 80% received back through the JRS.

Employers should take this into account when deciding whether an employee should take any period of annual leave whilst furloughed and it may be wise for an employer to see what annual leave periods/ bank holidays are coming up and to decide whether they wish to serve notice on the employee to cancel such leave. If the leave is cancelled, it will be put back in the holiday “pot” for the employee to take at a later date.

It is also important to note that the Working Time Regulations have been amended to allow employees to carry over annual leave to the next 2 holiday years if they are unable to take their leave due to the effects of COVID-19.

If you have any queries, please don’t hesitate to contact Katie Hodson on 0161 475 7670 or email [email protected].