COVID-19 HR: Holiday and Furlough - Friend or Foe?

French Duncan | 20 April 2020

 

Full details of how we can help you around COVID-19 / Coronavirus is available on our special page (www.frenchduncan.co.uk/covid-19) which you can access by clicking here. We will be keeping all our information updated as things progress and schemes are clarified, so please check back regularly, or follow us on Twitter or LinkedIn to keep informed of all the changes. 

The below blog refers specifically to Furlough and Holidays, if you haven't yet read our 10 Step Guide to Furlough and the Job Retention Scheme, we'd recommend doing that first by clicking here.  You can also access our FREE TEMPLATE documents all about furloughing staff by clicking here.

 

COVID-19 HR: Holiday and Furlough - Friend or Foe?

Written Thursday 2nd April, updated 5pm Monday 20th April 2020.

Holiday and furlough: friend or foe? The very simple answer is we don’t yet know.

The Coronavirus Job Retention Scheme is widely acknowledged as a lifeline for many businesses, and is hugely welcome in the current crisis.  However, the position with holidays and furlough has remained a bit of a mystery until the HMRC’s most recent update to their guidance. 

Below is the current position on holidays and furlough - this comes with a slight health warning in that the HMRC have slightly ominously stated in their guidance “During this unprecedented time, we are keeping the policy on holiday pay during furlough under review”:    

1. Accruing Holidays on Furlough – this is not at all contentious in our view…it is generally viewed that employees will accrue holidays as normal whilst on furlough given they remain employed, and this has been confirmed in the government guidance.
2. Taking Holidays on Furlough – this is slightly more contentious and the position could change, but the government have clarified that employees CAN take holidays whilst on furlough. We believe employers should set out for their furloughed employees what they want in terms of holiday usage and be prepared to change their stance if guidance, legislation or precedence emerges.  Given productivity on returning to normal business will be a key focus, employers may wish to set out the following in their furlough agreements:
   • A requirement to take any upcoming public holidays;
   • A requirement to use up outstanding holidays if it is nearing the end of holiday year; and / or
   • Using a proportion of holidays whilst off on furlough, for example, what the employee would normally accrue each month.

3. Paying Holidays on Furlough – this is the most contentious part, should employers pay holidays at 80% or 100%? This has been clarified by the government in their most recent guidance – employees should receive their normal pay for holidays.  So, if you are paying 80% and you are requiring employees to take holidays whilst on furlough, you will need to ‘top up’ the employee’s pay by 20% for their holiday days – the government will only reimburse the 80% for this as with other wages. 

There are some other non-furlough holiday related points which may be of interest to employers: 

• Holiday Carry Forward: There is new temporary legislation allowing employees to carry over holidays over a 2 year period for holidays they have been unable to take due to the coronavirus.  Employers should still be encouraging employees to take holidays throughout the year, but this amendment will be particularly helpful for key workers.  
• Enforcing Holidays: Employers can operate an enforced period of holidays providing they give notice of twice the length of the amount of days you need staff to take.  For example, if you want to operate a shut down for 5 days, you would give notice of 10 days.     
• Holiday Cancellations: It is likely many employees will have booked leave in the Easter or Summer holidays, and will now want to cancel them.  As it currently stands, this is at the discretion of the employer, and they can require the employee to still take the time off.

Like many areas just now, holidays will very much be a moving feast for the foreseeable but we will keep you updated with developments.

 

How French Duncan can help

The French Duncan HR team are on hand to help you in implementing furlough and other measures to survive the current crisis. 

If you would like to arrange a free telephone consultation with our HR team or discuss resources available, please contact 0141 221 2984 and we will direct you to our team.

Points of contact:

• Louise McCosh, HR Director: please contact Ciara McEleney at C.McEleney@frenchduncan.co.uk.

 

Further Information

For more information on the various others issues and assistance available around COVID-19 / Coronavirus, please visit https://www.frenchduncan.co.uk/covid-19/, which now includes some FREE TEMPLATES for Furloughing staff.

Here you will find information HMRC deferrals, business loans including Coronavirus Business Interruption Loan Scheme (“CBILS”), personal tax & self-assessment, debt assistance & restructuring and much more. You can also find contact details of the key staff able to help you further.