Employer’s Guide: Dealing with annual leave during the pandemic

Posted on May 14, 2020
Posted by Frankie Mundy

One of the many considerations for employers arising out of the coronavirus pandemic is likely to be its implications for annual leave. Whilst some employers may want to cancel staff members’ annual leave to help them to respond to a surge in demand during the crisis, others may want to encourage staff to use up their allowance to prevent an influx of requests when travel restrictions are lifted. Additional questions may arise for employers whose staff are on furlough leave and who want to know what impact the Coronavirus Job Retention Scheme has on furloughed staff members’ annual leave rights.annual leave during the pandemic

Whatever unique challenges your business is facing, we’ve pulled together an annual leave refresher to make sure you’re operating on the right side of the law. 

Back to basics

How much annual leave are my staff entitled to?

Most of your staff (including employees, casual workers and agency workers) are entitled to a minimum of 5.6 weeks paid holiday every year, which is equivalent to 28 days per year for a full-time member of staff. This can include bank holidays but it doesn’t have to. Remember that this will be pro-rated for part-time staff according to how many days per week that they work. 

You can offer your staff more than the legal minimum amount of holiday days, but you cannot give them less. 

 

How much do I have to pay staff whilst they are on annual leave?

You must pay your staff their normal rate of pay whilst they are on annual leave. 

Whilst this is straightforward with staff who receive a fixed amount (eg a monthly salary), it’s more complicated if their pay is variable. See our Q&A  on dealing with annual leave for guidance about how to work this out. 

 

How much notice do my staff need to give me before taking annual leave?

This depends what you’ve specified in their contract and in your annual leave policy. 

If you have not set out how requests should be made, your staff will need to make the request at least twice the number of days in advance as the number of days they want to take as holiday. For example, if your employee wants to take two weeks off, they will need to give you notice at least four weeks in advance. It is up to you whether you will be willing to agree to requests if the minimum notice is not given, but remember to balance any inconvenience to your business against possible effects on staff morale. 

 

Can I refuse annual leave requests from my staff?

It is open to you to refuse requests for annual leave but you must always aim to act fairly and reasonably and consider the implications that refusals may have on staff morale. If you do deny a request, you must tell your staff member at least the same number of days in advance of the proposed leave as your staff member requested to take. 

For example, if your staff member gave you four weeks’ notice that they wanted to take a two week holiday, you must tell them at least two weeks before they are due to start their leave that you are not agreeing to the request. 

Remember when you are refusing annual leave requests that your staff must usually take at least four weeks’ of their annual leave entitlement during the holiday year in which it accrues and you must generally pro-actively encourage them to do so. See below for more information about the exceptional circumstances when your staff can carry over leave into other holiday years. 

 

What if all of my staff want to take leave at the same time?

If all of your staff request to take leave at the same time and you cannot accommodate all of the requests, it’s up to you how you deal with this. 

There are no strict legal rules determining how to decide who can take leave, but you should communicate with staff to let them know how you will decide (eg if you are operating a ‘first come, first served’ policy). 

 

Annual leave and sick leave

 

Do my staff continue to accrue annual leave whilst they are on sick leave?

Yes. If any of your staff are on sick leave (eg because they are unwell with coronavirus or they are self-isolating), they will continue to accrue annual leave during that time. 

 

If staff are unable to take annual leave because of sickness absence, can they carry holiday over to the next year?

Yes. If your staff are unable to take any of their leave in the relevant holiday leave year due to their sickness absence, you must allow them to carry over the outstanding allowance (up to a maximum of four weeks’ leave) forward for up to 18 months. Note, however, that if they are unable to take their annual leave because they are off sick with coronavirus, different rules apply (see below). 

 

What if staff become sick during a period of annual leave?

If a staff member falls ill shortly before a planned holiday and remains so during that period, or if they fall ill during their annual leave period, they will automatically become entitled to sick leave instead and you must permit them to rearrange the remainder of their annual leave for later that year; you cannot force them to take annual leave instead of sick leave.

Despite this, a staff member may choose to take annual leave even when they are sick, particularly if you do not offer an enhanced sick pay policy and they are only entitled to statutory sick pay. There is nothing to stop them doing this. 

 

Annual leave and furlough leave

 

Do my staff continue to accrue annual leave whilst they are on furlough leave?

Yes. Annual leave continues to accrue whilst staff are on furlough leave.

 

Can I ask my staff to reduce their annual leave entitlement because they have been furloughed?

If you want to vary your staff member’s annual leave entitlement because they will be on furlough leave for a portion of the year, you will need to get their consent to this. Note, however, that you cannot reduce their holiday allowance below the statutory minimum (ie 28 days per year for full-time staff). 

 

Can furloughed staff take annual leave?

Yes. The Coronavirus Job Retention Scheme does not prevent staff from taking annual leave whilst they are furloughed and a period of annual leave will not disrupt their furlough leave. 

 

How much should I pay staff who take annual leave whilst they are furloughed?

The Government’s guidance confirms that any furloughed staff who take annual leave should be paid at their normal rate of pay (ie you will need to top up their pay to 100% if you are not already). You will still be able to claim back 80% (up to a cap of £2,500 per month) under the Coronavirus Job Retention Scheme.

 

How should I pay my furloughed staff for bank and public holidays?

If your staff usually work on bank or public holidays, you can agree that the day will be included in their furlough pay. 

If your staff usually take bank or public holidays off, you will have to treat the bank or public holiday as a day’s annual leave and top your staff member’s pay up to 100% of their usual pay for that day. Alternatively, you could consider giving them a day’s holiday in lieu and continue to pay them furlough pay during the bank holiday. 

 

Can I prevent my staff from taking holiday whilst they are furloughed?

Yes you can, but the usual rules will apply (see below). 

 

Can I require staff to take annual leave whilst they are furloughed?

The usual rule is that it is open to you to require your staff to take annual leave at a certain time, provided that you give them appropriate notice (see below for the usual rules). Whilst the Government has confirmed that the usual rules on notice apply where employers wish their staff to take holiday during their furlough leave, it has warned that you will need to weigh up whether requiring staff to take annual leave whilst they are under certain restrictions (eg if they are self-isolating or due to the nature of social distancing rules) would prevent them from benefiting from a proper period of rest and relaxation. This might be particularly relevant to staff who are shielding or to staff who have caring responsibilities. The reason for this is that the purpose of the legal right to annual leave is to allow staff to rest and recuperate. 

Given the scope for dispute, the best approach is likely to be to aim to reach agreement with your staff about when they take holiday rather than seeking to require them to take it against their wishes. 

Remember that if your staff take annual leave whilst they are on furlough, you will need to top up their pay to 100% of their usual pay during that period. Whilst this may make it an unattractive option for some employers, it may also be an incentive that others can use to encourage their staff to take annual leave during furlough, if they wish them to do so.  

 

Requiring and restricting staff from taking annual leave

 

Can I insist that staff take any previously booked leave if they want to cancel it?

Yes you can but ACAS recommends that it’s best practice to get your staff members’ agreement if you’re going to insist they take any previously booked holiday; communicate with your staff to explain why you are requiring this. 

If they want to change the dates instead, they’ll need to request your consent to this giving the usual notice requirements (see above). 

 

Can I require my staff to take some of their annual leave at specific times?

Yes you can, but you must give your staff notice of this unless specific periods are set out in their contract. It is best practice to communicate clearly with your staff to explain why you want to specify when they take their annual leave.

The minimum notice you must give your staff if you are requiring them to take leave is at least twice the number of calendar days in advance as you want them to take. 

For example, if you decide to shut down for a week during the pandemic and you want all of your staff to use a week’s worth of holiday allowance during this time, you must give them at least two weeks’ notice of this. The notice must be given at the latest on the day before the notice period begins. For instance, in the above scenario, you would need to give the notice at the latest two weeks and one day before the first day of the required holiday period. 

You may want to consider encouraging your staff to take a certain amount of annual leave per quarter whilst the pandemic is ongoing. Not only will this likely be beneficial for their wellbeing, but it will also prevent all of your staff having large amounts of accrued holiday towards the end of the year. However you choose to handle this situation, make sure you act reasonably and consult with your staff about why you need to take such steps. 

 

Can I prevent my staff from taking annual leave at certain times?

Yes you can, but you must give them notice of this unless specific periods are set out in their contract. 

The minimum notice you must give your staff if you are preventing them from taking leave is at least the same number of calendar days in advance as you are preventing them from taking. 

For example, if you want to prevent staff from taking annual leave for three weeks to help your business through a busy period, you will need to give them at least three weeks’ notice of this (ie three weeks before that period will start). The notice must be given at the latest on the day before the notice period begins. For instance, in the above scenario, you would need to give the notice at least three weeks and one day before the first day of the restricted holiday period. You should remember to act reasonably when preventing staff from taking annual leave, and it is best practice to consult with your staff and explain why this measure is required. 

Remember that your staff members must usually take at least four weeks of their annual leave entitlement in the holiday year that it falls due, although there is an exception if they have been unable to take their leave due to the effects of coronavirus (see below). Not only is it a legal requirement for your staff to take their annual leave, but there are also employee wellbeing considerations to bear in mind, as it is important for your staff to take breaks from work.  

Note that if any of your staff have requested to take annual leave that they have carried over from a previous holiday year due to COVID-19, as well as giving the correct notice to them, you must also have a ‘good reason’ for preventing them from taking it as requested. See our Q&A on dealing with annual leave for further information.

 

Carrying over annual leave 

 

Are my staff entitled to carry over their annual leave to the next holiday year?

It depends. Typically, at least four weeks of a full-time staff member’s annual leave entitlement must be used in the same holiday year in which it accrues. It’s up to you to decide whether you will allow them to carry over any of their entitlement over and above this. For example, if they get the legal minimum holiday allowance of 28 days, at least 20 days must be taken in the holiday year in which it accrues, but you can agree that they will carry over 8 days into the next year. See our Q&A on dealing with annual leave for further guidance. 

However, there are some exceptions to this. Your staff can carry over some (or all) of that four weeks’ entitlement into the following year if they have been unable to take it because:

  • they were off sick; 
  • they were on a period of family leave (eg maternity or adoption); or
  • it was not reasonably practicable for them to take it due to the effects of COVID-19 on themselves, you (as their employer) or the economy or wider society. 

Bear in mind that you must give your staff the opportunity to take any unused leave that they cannot carry over before the end of the relevant holiday year.

 

In what circumstances can my staff carry over their annual leave because of coronavirus?

There are two circumstances in which coronavirus may affect your staff members’ ability to carry over their annual leave: 

  1. if your staff member is self-isolating or becomes unwell with coronavirus and, as a consequence, they are unable to take their full holiday leave allowance before the end of the holiday leave year; or
  2. if it was not reasonably practicable for them to take some or all of their annual leave due to the effects of COVID-19. Considerations for your business when determining whether it was not reasonably practicable include significant increased demand for your services, disruptions to your workforce (including your ability to provide cover), the need for your staff member to take a period of rest, and how much of your leave year remains. hilst Government guidance makes it clear that staff should usually be able to take annual leave during a period of furlough, this may not be possible if you cannot afford to cover the additional cost and the accrued leave can’t be taken upon their return; in that situation, the leave may be carried over.

 

In either case, you must allow staff to carry over at least four weeks of their allowance into the next two holiday years. It’s up to you whether you will allow them to carry over any allowance over and above that. 

Note that this departs from the usual rules around carrying over holiday due to a sickness absence which is not coronavirus related. See our Q&A on dealing with annual leave for more information. 

Remember that in most cases, you should still encourage your staff to take their annual leave entitlement in the year in which it falls due and should do everything you reasonably can to ensure that they are able to do so. If your staff are still able to take their leave as normal despite the crisis, consider advising them that you do not anticipate that the ‘carrying over’ exemption will apply to them; although you should listen to staff who think that the exemption ought to apply to them, and act reasonably when making any decisions on the matter.

 

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