Furlough and Annual Leave

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Furlough and Annual Leave

At the time of writing (10am on Friday 9th April), the “official” position is that it is still not clear how the government intends furlough leave to interact with annual leave. ACAS have very recently updated its guidance to state that employees can request to take annual leave during furlough, however, we are not yet clear of the impact this could have on claiming a grant for a period of furlough under the Job Retention Scheme. HMRC are not obliged to follow ACAS Guidance in this respect so we believe employers should exercise some caution. We also await “official” guidance to confirm whether holidays during furlough are to be paid at 80% or 100%, although those keen-eyed Twitter users amongst you may have noticed that HMRC have tweeted that if an employee has holiday booked (including bank holiday) during furlough, then as long as it’s part of statutory 5.6 weeks’ holiday entitlement, the employee will still be entitled to receive this holiday but must receive their full pay for the holiday.
For now, and please keep in mind this is an ever-changing landscape, due to the lack of firm and “official” guidance, the very safest approach is to exercise caution and perhaps decline requests for leave during furlough and to permit furloughed staff the opportunity to take leave when they are out of furlough. In the meantime, and specifically in respect of the upcoming bank holidays, again the safest position is the leave should be carried forward to the next holiday year until further official guidance is issued. However, if as an employer you decide to continue to treat the bank holidays as statutory annual leave whilst an employee is on Furlough, whether as a result of the above referenced ACAS guidance, HMRC’s tweet or otherwise, then in respect of pay, we would suggest this needs to paid at full pay. Again, if you do proceed down this route, given HMRC are not obliged to follow ACAS and the only source of information we have direct from HMRC is a tweet, then you must shoulder some risk in respect of the eligibility of your claim for such a period under the Job Retention Scheme. We would hope such a risk is minimal but until further guidance is released, which we hope will very soon, at least some degree of caution appears prudent.
Finally, under the current guidance it is possible to furlough someone for the minimum three-week period, but then take them out of furlough and place them on annual leave on full pay for a period of time, and then re-furlough. This could help employees with the financial burden of any reduction in pay during furlough whilst for the employer, ensuring that staff are using annual leave
As always, the above is only intended as guidance. Please take specific advice for your business as and when required and as always, we will continue to scan the horizon for further updates and bring them to you as soon as possible.

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