So what should happen for furloughed workers, especially as many would not normally be working across Christmas and New Year? Can they be furloughed during those periods? Must employers top-up to 100% holiday pay?
Where a bank holiday (such as Christmas, Boxing Day and New Year) falls inside a worker’s period of furlough and the worker would have usually worked the bank holiday, their furlough will be unaffected by the bank holiday.
However, if the worker would usually have had the bank holiday as annual leave, employers have two options:
1-The bank holiday is taken as annual leave
If the employer and the worker agree that the bank holiday can be taken as annual leave while on furlough, the employer must pay the correct holiday pay for the worker. Employers may also require workers to take the bank holiday as annual leave with the correct notice periods.
2-The bank holiday is deferred
If the employer and the worker agree that the bank holiday (including Christmas and New Year) will not be taken as annual leave at that time, the worker must still receive the day of annual leave that they would have received. This holiday can be deferred till a later date, but the worker should still receive their full holiday entitlement.
Holiday pay and furlough
Furloughed employees continue to accrue leave entitlement as per their employment contract and holiday law employment rights.
The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to a minimum 5.6 weeks of statutory paid annual leave each year which they cannot go below (even zero hours and part-time).
Employees can take holiday whilst on furlough. If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.
Employees should not be placed on furlough for a period simply because they are on holiday for that period. Working Time Regulations (WTR) require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks (twelve weeks in Northern Ireland). Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.
Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period.
If an employee usually works bank holidays then the employer can agree that this is included in the grant payment.