Government guidance on holiday pay for staff and temps during furlough

The Government has released guidance regarding holiday pay during furlough for employees and temporary staff which “outlines how holiday entitlement and pay operate during the coronavirus pandemic. It is designed to help employers understand their legal obligations.”

The Department for Business Energy and Industrial Strategy (BEIS) released the guidance which tells employers they can ask employees to both take and cancel a holiday. They can ask a worker to cancel their holiday if they give them enough time to do so.

Furloughed workers continue to accrue statutory holiday entitlements. It has already been announced that furlough workers can take annual leave without breaking furlough rules.

When it comes to agency workers, they continue to accrue holiday when on furlough as the BEIS outlines “where a furloughed agency worker takes holiday, the employer who has placed the agency worker on to furlough may continue to claim the grant from HMRC.”

In March, the Government gave employees who have not taken the whole amount of their statutory annual leave entitlement this year to now be able to carry it over for the next two years due to COVID-19. This allows businesses the flexibility to deal with the pressures brought on by the virus more effectively.

The Working Time (Coronavirus) (Amendment) Regulations 2020 will amend the Working Time Regulations 1998 “to allow workers to carry over their holiday in to the next two leave years, where it is not reasonably practicable for them to take some, or all, of the holiday they are entitled to due to COVID-19,” according to Daniel Barnett, the employment law barrister.

Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC) said:

It has taken time and effort, but we are really pleased to see this new guidance from the Government. It confirms the status of holiday pay accrual for temps and will hopefully remove the huge cost barrier to higher rates of furlough that many agencies faced before now. It is now clear that holiday pay does not accrue for those temps who are on a contract for services at all. The guidance also confirms for those on contracts of employment, holiday will accrue as per their contracts, treating furlough as the same as a period not on assignment. Any holiday pay that does accrue because of the unique terms of individual agencies, can be reclaimed at 80 per cent under the CJRS. We’ll look at what further steps can be taken to support these firms.

At long last, this brings the clarity that the REC has been campaigning hard for over the past few weeks.