Various new employment regulations have been introduced in response to the coronavirus pandemic, all with the intention of helping businesses and the workforce cope with the effects of the outbreak, whether from a social or economic perspective. Here, we focus on the introduction by the UK Government of new regulations, which relax the current rules about the carrying over of workers’ holiday entitlement into future holiday years.
Standard holiday rules
The rules regarding whether a worker’s holiday entitlement can be carried over into the next holiday year are set out in the Working Time Regulations 1998 (the ‘WTR’), which apply to the majority of workers.
Workers are entitled to 5.6 weeks’ (28 days) paid leave in each holiday year. This is made up from:
- four weeks’ basic leave; and
- 1.6 weeks’ additional leave.
Employers are able to supplement this statutory holiday entitlement with a further period of contractual leave, if they so wish.
Ordinarily, the four weeks’ basic leave cannot be carried over into any future holiday year (subject to several specific exceptions). If it is not used in full by the worker, they will lose it and are not entitled to be paid in lieu. This is to ensure that workers get an adequate break from work. To that end, employers should encourage their workforce to take their full holiday entitlement in any year and failure to do so could result in financial penalties against the employer.
The 1.6 weeks’ additional leave can be carried over into the next holiday year if agreed between the employer and the worker, as can any supplemental contractual leave.
The new regulations brought in as a result of the coronavirus outbreak, relax the usual position by allowing the carrying over of up to four weeks’ basic leave into future holiday years.
COVID-19 holiday entitlement & carry-over rules
Under the new regulations, the WTR will be amended to allow that up to four weeks’ basic leave can be carried over into the next two holiday years.
This holiday rollover will be allowed, if, as a result of coronavirus, a worker has been unable to take their full statutory holiday entitlement in this holiday year.
This may be because of coronavirus’ effects on the worker or their employer or its wider-ranging effects on the economy or society.
Any worker who leaves the employer during that two-year period can receive payment in respect of any part of this basic leave still untaken.
There will be no change to the position in relation to a worker’s 1.6 weeks’ additional leave and any contractual leave (these can be carried over into the next holiday year if agreed between the employer and the worker).
The amendment has been made primarily to (i) ensure that key workers who are unable to take their annual holiday entitlement because of coronavirus, will not lose any of their annual leave allowance and (ii) allow flexibility for key businesses affected by the outbreak; businesses which are unable to allow their workers to take holiday at the current time could be subject to an influx of holiday requests as soon as everything returns to ‘normal’ and permitting holiday rollover should go some way to alleviate this.
Will zero-hour workers be able to carry over holidays?
Yes, zero-hour workers will be able to carry over holidays in line with the new regulations. Most workers are covered by the WTR, including zero-hour contract workers and agency workers.
Can employees use holidays during the crisis?
Employees are able to take and use their holiday entitlement as normal throughout the outbreak and employers should encourage them to do so. That said, the reality of the crisis is making it extremely difficult for many employers, such key worker employers, to be able to agree to any holiday requests. Employers are able to refuse a holiday request if they have good reason for doing so. In addition, employers can also cancel booked holidays, provided that they have good reason for doing so and give the affected worker the same number of days’ notice as the number of leave days that were to be taken. For example, if a worker had booked five days’ holiday, the employer must give that worker five days’ notice of the holiday’s cancellation.
Conversely, some employers may want their workers to use their annual leave entitlement during lockdown, particularly if their business is struggling or has less work as a result. Employers are also able to insist that a worker uses their statutory annual leave entitlement on certain days, provided that they give the worker proper notice. The notice should ideally be in writing, must set out the days to be taken and, subject to the contract of employment, the notice period must be at least double the length of the leave period. For example, if an employer requires a worker to take two days’ holiday, they must give the worker four days’ notice.
It is also likely that many workers will decide to cancel their booked holidays, for example, because they were planning to travel and now are unable to do so or because they decide that it is more worth their while to work given the current social distancing and other restrictions in place. Unless otherwise provided for in their contract of employment, agreeing to this or not is at the employer’s discretion.
Employers should bear in mind that there are possible discrimination issues which may apply if they require holiday to be taken or refuse to permit a worker to cancel their holiday. The personal circumstances of the relevant worker should be considered and if there is any doubt, legal advice should be taken.
Can employees take annual leave if furloughed?
Advice from HMRC customer support stated it is possible to take annual leave when on furlough. Further, this must be paid at full pay.
According to the Government’s guidance, furloughed employees are entitled to ‘the same rights as they’ had ‘previously’. As a result, statutory leave should continue to accrue to furloughed employees and on the basis that their right to the holiday has already accrued, they should be paid their full salary for this, rather than 80%. (Whether the Government will subsidise this amount up to 80% has not yet been clarified.) This may be a useful incentive if employers wish employees to take some holiday during lockdown.
Employer guidance on the COVID-19 holiday carry-over rules
- Employers need to quickly decide their preference in relation to their workforce taking annual leave over the coming weeks and months. Explaining your position to your staff and being open in your discussions and decision-making will help employer-worker relations and may boost morale during what is an anxious time for all.
- Employers should clearly explain the new regulations to their workforce and allow them to ask questions and air any concerns.
- Keep track of workers’ untaken holiday over the coming weeks and months. This will allow employers to decide whether carrying over holiday may be problematic and possibly help in determining a strategy for managing it.
- Consider how the new regulations will work in practice in terms of workers having more holiday entitlement in the next two holiday years. Employers, for example, could consider closing the business for a week during a quiet period, say Christmas, to allow workers to take some of their carried over leave at the same time. Although workers cannot be paid in lieu for their statutory holiday entitlement, any employers who have agreed extra contractual leave could negotiate with workers to pay them for this for the next two years so as to reduce the amount of leave being taken.
- Any employer wishing to require their workers to take some holiday during the coronavirus outbreak should ensure that the correct notice is given. It is advised to consider this carefully. Many workers may not want to be using their holiday during lockdown, when there are travel and social distancing restrictions in place. Forcing workers to do this may have a detrimental effect. Being honest and open in communications with workers may go some way to alleviate this.
- Any employer wishing to cancel any holiday already booked by a worker can do so, provided they give the correct notice and have a good reason. Carefully consider though whether the holiday really does need to be cancelled. Taking a break from work is essential for everybody and allowing a worker to take a short break may be beneficial for all concerned.
- Workers who wish to cancel pre-booked holiday need the consent of their employer. Employers should take into account the worker’s reasons before making a decision. Having a few days at home is still a break from work, but again, forcing workers to take holiday when they are unable to travel anywhere may have a negative effect on morale.
- Employers should take legal advice if they are unsure about any of the holiday entitlement provisions or how they apply in practice.
The guidance in this area continues to develop as in response to the rapidly changing situation. Employers are advised to keep the government guidance under review and take professional advice about any workforce concerns.
If you are concerned about the employment risks relating to the coronavirus and mitigating its impact on your workforce and business, we can help. Our team of employment specialists can support with advice on specific issues and developing a strategy to manage the ongoing risk and aftermath of the Covid-19 crisis. Speak to our experts today.
Last updated: 6 April 2020
COVID-19 Holiday Entitlement FAQs
Can employees take annual leave if furloughed?
Generally employees can take annual leave if furloughed, although the effects on the furlough period have not yet been clarified. It may be more sensible to ask employees to take annual leave at the start or the end of the furlough period.
How do we carry over holidays due to the crisis?
Under new regulations, workers can carry over up to four weeks’ basic leave to the next two holiday years if they are unable to use it this year because of coronavirus. They are also able to carry over 1.6 weeks’ additional leave for one year if their employer agrees.
How many days of holiday are workers entitled to each year?
Full-time workers are entitled to 28 days’ holiday each year, including the Bank Holidays. This is made up of four weeks’ basic leave and 1.6 weeks’ additional leave.