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COVID-19 – Employment Law Update 5: Furlough Leave and Annual Leave


Coronavirus Job Retention Scheme (Furlough Leave) and Annual Leave

A highly discussed topic currently is whether employers can compel employees to take annual leave whilst they have been furloughed.  This has become particularly relevant, as the Government has recently announced that the Coronavirus Job Retention Scheme is to be extended until October 2020. 

Employees who are currently furloughed continue to accrue their annual leave entitlement, meaning employees could accrue up to eight months of annual leave when they return to work in October.  To combat this issuing facing employers the Government has issued guidance.

The first option available to employers is for them to compel their employees to take annual leave whilst on furlough leave.  The Government have confirmed that they would continue to pay 80% of the wages of employees whilst on annual leave but employers must top-up the remaining 20% of the employee’s wage to ensure the employee receives a full wage as if they had been working. 

However, the Government has stated that employers “should consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday.”

The second option available to employers is to allow employees to carry over their annual leave entitlement over the following two years.  It is unlikely that furloughed employees will need to carry over their statutory annual leave, as they can take this during their furlough leave.  However if it is not reasonable practicable for the employee to take annual leave during their furlough leave, for example the employer is unable to afford to top-up the employee’s wage, then the employee must be given to the opportunity to take his or her remaining leave over the following two years with the correct pay.

Disclaimer – The above facts are accurate as of 16:45 on 21 May 2020.

For advice on this, or any other employment matter, contact the employment team on 01905 723 561 or email: Guy.salter@smesolicitors.co.uk or Sonia.ali@smesolicitors.co.uk 

Added: 26 May 2020 12:00


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