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Government issues new guidance on furlough and annual leave

The Government has issued new guidance on furlough and holiday pay, clarifying potential issues in an update published by the Department for Business Energy and Industrial Strategy (BEIS).

Last month the Government confirmed that workers who have been furloughed through the Coronavirus Job Retention Scheme (CJRS) could take annual leave without breaking furlough, but there remained issues over whether an employer could require staff to take annual leave.

The guidance has confirmed that furloughed workers continue to accrue statutory holiday entitlements, as well as any additional holiday as per the terms of their employment contract.

Agency workers will also continue to accrue holiday, with furlough being treated as time between contracts.

Employers can require staff to take annual leave while furloughed, as long as the usual statutory notice periods are observed, but the guidance advises employers to ‘engage with their workforce’ and explain the reasons for asking them to take leave before doing so.

Employers can claim through the CJRS for furloughed workers even while they are taking annual leave. However, they are required to make up the difference if the employee is entitled to higher holiday pay than their furlough pay (80 per cent of their salary up to £2,500).

Emergency legislation has been passed to allow essential workers to carry over any holiday they were unable to take this year because of the COVID-19 pandemic, for up to two years. Bank holidays can either be taken as annual leave or deferred if an agreement is reached between the worker and employer.

For help and advice on matters relating to employment law, contact our expert team today.

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Amanda Hyam

Amanda Hyam

Associate – Dispute Resolution / Employment
I have specialised in Dispute Resolution, Civil Litigation and Employment law for more than 15 years.  I understand how daunting the prospect of litigation can be and because of this I am always available to discuss concerns.

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