What holiday pay should I give staff on furlough?

Holiday entitlement, pay and furlough - what are my employees entitled to?

COVID-19 has caused unprecedented challenges for employers. You may have furloughed many of your staff members, but you still need to navigate holiday pay and leave entitlement. In this article, we look at how holiday entitlement and pay apply during the coronavirus outbreak. This guide is designed for employers with furloughed employees, and those with employees who have continued to work.

Coronavirus and holiday entitlement

Almost every worker in the UK is entitled to 5.6 weeks' paid holiday per year, but many employees have additional holiday entitlement factored into their employment contract. Workers are entitled to the same amount of holiday, regardless if they are on sick leave, maternity or parental leave, or if they take any other type of statutory leave. Workers cannot be required to take holiday while they are on sick leave.

Furloughed workers and holiday entitlement

Workers continue to accrue holidays while they are on furlough and may take holidays without affecting their furlough. If you require an employee to take some of their holiday entitlement while on furlough, it is important to consider whether the employee will be able to relax and enjoy leisure time - the purpose of a holiday. The need to self-isolate, socially distance or if an employee is sick, may prevent them from resting, which is the fundamental part of taking holidays from work.

Are furloughed workers entitled to bank holidays?

If a bank holiday falls within a period of furlough, and the worker would typically have been working on that date, furlough will not be affected by the bank holiday. However, if the employee would normally have had annual leave on that date, you have two options:

¥             The employee may take the bank holiday as annual leave

¥             The bank holiday may be deferred to a later date

How much holiday pay are workers entitled to?

The holiday pay a worker is entitled to will depend on the number of hours they work, and how they are paid for the hours they work. Holiday pay entitlement for employees - regardless of whether they are on furlough or continue to work - can be calculated using the standard Government guidance.

Note on furloughed workers and holiday pay

It is essential that employers correctly calculate furloughed workers' holiday pay entitlement. Employers should not simply pay employees the rate of pay they are receiving while on furlough. The only exception is if an employer has agreed to pay the employee their usual rate of pay while they are on furlough. If any of your furloughed workers take annual leave during their period of furlough, you should calculate the correct amount of holiday pay using the standard guidance.

If the amount owed is at a rate higher than the pay they receive while on furlough, you are obliged to pay the difference. Taking holiday will not affect the furlough period, so you can claim the usual 80% grant from the government to cover the cost of holiday pay.