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Furlough and Annual Leave

Furlough and Annual Leave

Monday, April 6, 2020

What do we know?

We know that in terms of SSP, you cannot receive SSP and furlough at the same time and this is likely because both are government benefits. When an employee returns from sick leave and is fit for work, you can put them on furlough leave then.

We know that holiday accrues during furlough leave and that employees/workers can carry over up to 4 weeks holiday in the next 2 years.

We also know that Employers can require employees/worker to take holiday during furlough provided that they give twice as much notice as the leave they are required to take.

What don’t we know?

There is much we don’t know for sure. There are no regulations and no government guidance on the following points as at today’s date. That could change and we will update you as and when it does. However our thoughts are as follows:

How much should you pay an employee on holiday during furlough? Do you pay them the 80% (capped at £2,500 per month) or should you pay them their usual salary/average pay?

Our view is that you pay them their usual salary/average pay including shift allowances, bonus, commission etc. A long string of cases referred to as the Bear Scotland cases; said that shift allowances,  bonus, commission etc should be included in the calculation for holiday pay otherwise it would disincentivise staff from taking holiday which is contrary to the principle behind the Working Time Directive.  From 6th April 2020, average pay for those on variable hours is to be calculated over a 52 week reference period.

Can employers recoup holiday as part of the furlough scheme?

Our view is that (because there is no difference between holiday and furlough in the sense that the employee is neither working nor at work) logically employers should be able to claim 80% of their employees’ salary under the furlough scheme but they will have to top up the additional 20% so that the employee receives normal remuneration during holiday. As furlough is the predominant cause, employers should be able to claim it back.

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