Annual Holiday – COVID-19

 In Cov-ID

Although we can’t actually go ‘on holiday’, business are heading in to the holiday season. You may have people cancelling holiday because they are furloughed or it may be not practical to take the holiday. We take a look at some areas to consider:

Do furloughed employees accrue holiday?

Yes, statutory annual leave continues to accrue along with additional holiday entitlement.

Can furloughed employees take holiday without jeopardising your right to a reimbursement under the Job Retention Scheme?

Yes, new guidance published by the government now is clear that employees’ can take holiday whilst on furlough leave. Employees’ book holiday in the usual way and the employer can still claim the reimbursement under the Job Retention Scheme.

Can employers request employees take holiday? either during furlough or otherwise?

Yes, you can advise your employees when to take holiday, giving twice the amount of notice to the amount of time being take. For example 2 weeks notice for 1 week’s holiday.

  • Any holiday taken must be paid at 100% (ie until the end of August, 80% Furlough and 20% Company top up / September – 70% Furlough and 30% Company top up / October – 60% Furlough and 40% Company top up).

If I allow employees to take the holiday whilst furlough, would I continue to pay 80% of their salary?

If an employee requests to take holiday whilst furloughed, the guidance is clear that the employer would pay 100% of the employee’s normal pay. The employer can continue to claim 80% towards that pay.

What if an employee goes abroad after 8th June 2020 and needs to quarantine for 14 days on their return?

  • There are currently some exclusions to the regulations, including returning from countries such as Ireland, the Channel Islands and the Isle of Man.  Full details of the scheme can be found at: Entering the UK
  • Identify which employees may be impacted ie who has holiday abroad booked or is thinking of taking a holiday abroad in the next few months
  • The employer is under no obligation to pay employees whist in quarantine after a holiday, therefore the employee could consider additional annual leave is taken or unpaid pain leave.

What if an employee’s pay varies?

A week’s holiday pay for any holiday taken after 6th April 2020 should be calculated based on an average of the last 52 weeks’ pay (but not including any weeks spent on furlough) and taking any NMW increase. For any holiday taken prior to 6th April 2020, employers can use the previous 12 weeks’ to calculate average pay but employers still need to discount any non-working weeks.

Do I need to allow employees to carry over holiday entitlement under the new rules?

The government announced new measures to relax statutory holiday carry over. The new measures are:

  • Annual leave can be carried over up to 4 weeks paid holiday over a two-holiday year period (2021/202) as long as the employee was not able to take their holiday because of coronavirus for example:
  • They are self-isolating or too sick to take holiday before the end of their leave year
  • They have been placed as a designated furlough worker or laid off
  • They are continuing to work and could not take paid holiday.
  • Any remaining annual leave under statute (1.6 weeks) or under contract will need to be taken in the holiday year it accrues or be carried over with agreement.

If there isn’t an agreement in place to carry over holiday, the decision to carry over the employees’ holiday and agreement is between the employer and the employee. What ever agreement the employer and the employee reach, it is a good idea to confirm it in writing.

 What happens to bank holidays whilst the employee is furloughed?

Bank holidays are part of the minimum holiday of 5.6 weeks paid holiday and employees must receive their usual pay for bank holidays. If an employee is furloughed during a bank holiday, the decision to allow that bank holiday or not is in relation to paid holiday. If you are paying 80% of the employees’ salary and there is a bank holiday whilst on furlough, the employer should top up the employees pay to 100% to account for the bank holiday.

Should the employer continue to pay 80% of the salary during the bank holiday, the bank holiday would be given back to the employee as part of their holiday entitlement to use at a later date.

Can I ask the employee to cancel their holiday?

Yes, employers do have a right to tell employees when to take holiday however it is advised to give the employee at least the same number of days’ notice as the original holiday request should the employer request the employee cancel their holiday.


Communication is key to ensure transparency regarding holiday. Updating your handbook or holiday policy as soon as possible and review this regularly.

For more information or if you would like us to review your own holiday policy, please get in touch

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