Furlough: Time for a Break?

21 Apr 2020

The Coronavirus Job Retention Scheme (CJRS) Guidance has been updated twice in the last week (fourth and fifth revisions) and we also now have a new “Direction” from HM Treasury on how HMRC should manage the CJRS. Together with the Chancellor’s confirmation on 17 April that the CRJS should be extended to 30 June, it was another dynamic week for furlough related matters.
Of some relief to employers in the latest Guidance published on 17 April was the reference to how annual leave may work while on furlough. However, unhelpfully, this was in the Guidance to employees rather than that aimed at employers. For employers the information is tucked away in the supplemental Guidance around how to calculate what an employer might claim (https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme).
It is now explicit that it is possible to take annual leave while on furlough. While not explicit in the Guidance, it would appear that at least part of the wage costs in relation to annual leave during furlough will count as claimable wage costs under CJRS. However, the employee is entitled to their normal (100%) pay for any annual leave. Normal pay will need to include certain overtime and commission elements in line with the recent developments in this area.
This will be of relevance to employers in relation to the Easter Bank Holidays in April and to the VE Day and Whitsun Bank Holidays due in May. Employers will effectively be able to chose whether the Bank Holidays are to be paid at full rate, or whether the individual is allowed to carry forward an additional day until the post-furlough period.
It remains unresolved whether an employer can demand that an employee takes annual leave while on furlough. However those employers who have been taking the stance that employees are required to take annual leave during furlough, and have been relying on the Working Time Regulations on this point, must ensure that they provide them with notice which is at least double the amount of annual leave which the employee is to take e.g. taking one week’s leave requires two weeks’ notice to be given. It is also sensible that any requirement for employees to take annual leave is reasonable, so that employees aren’t required to take all annual leave, retaining some for the remainder of the leave year.
The most recent Guidance issued on 17 April  concludes the annual leave section by saying: "During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.". We take this to mean that Guidance on annual leave is liable to change and possibly with relatively short notice. It may be that payment can only be claimed in respect of holiday accrued up to the point it is taken, or an even narrower approach would be to limit claims in respect of the period of holiday which has accrued while the individual has been on furlough.
As ever, the only certainty in relation to CJRS is that nothing is completely certain.

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