Coronavirus and carrying over annual leave

Wednesday 1 April 2020

Under the Working Time Regulations 1998 (WTR), if an employee is unable to take their annual leave entitlement in the year in which it accrues, they cannot carry it forward except in limited circumstances where it has not been possible for the employee to take holiday. For example, this may occur as a result of maternity leave. The entitlement is lost and the employee is not entitled to a payment in lieu of the untaken holiday.

This is because WTR is primarily a health and safety measure aimed at ensuring that employees take the rest from work to which they are entitled and do not instead ‘cash in’ their holidays.

Last Friday, the government published the Working Time (Coronavirus) (Amendment) Regulations 2020 (Regulations) which amend the WTR in light of the COVID-19 crisis.

It is accepted that furloughed employees will continue to accrue holiday entitlement whilst on furlough. The new Regulations address the anticipated problem of employees building up a ‘bank’ of unused holiday.

The Regulations will therefore permit employees to carry forward up to four weeks of their annual leave entitlement into the next two leave years if they have been unable to take holiday due to coronavirus.

An inability to take holiday might be because the employee:

• was self-isolating or have been too sick to take their holiday;
• was temporarily laid-off or furloughed; or
• had to continue working and could not take holiday.

Additionally, under the Regulations an employer’s ability to refuse an employee’s request to use carried-forward leave on particular days will be permitted only when the employer has ‘good reason’ to do so.

It is important to note, however, that this new right to carry-forward leave will only apply to the 4 weeks of holiday entitlement provided by the EU Working Time Directive, not the additional 1.6 weeks provided by WTR.

As a result of the mass disruption to travel both abroad and within the UK, many employers are finding that employees who have booked holiday are requesting to postpone it. How should an employer respond?

Employees may postpone their holiday in certain circumstances. An example is where the employee has contracted coronavirus or is displaying symptoms of it. They are then treated in the same way as an employee who is absent due to illness. Such an employee is allowed to reschedule their holiday.

The government aims to ensure that workers do not lose out on any annual leave entitlement where it is not reasonably practicable for them to take some or all of their holiday in 2020 as a result of the effects of COVID-19.

In coming months it will be vital to be able to distinguish between leave carried forward for reasons connected with coronavirus and leave which the employee simply didn’t get round to using – and which under WTR is generally lost if it is not used in the year in which it accrued.

Employers will need to keep detailed records of what leave has been carried over as a result of the outbreak. A subsequent payment in lieu of untaken annual leave (made on termination of employment) will need to factor this in.

Furthermore, once the outbreak is over employers will have to manage requests for holiday very carefully. We foresee the potential for a large portion of the workforce with substantial ‘banked’ holiday entitlement to ask to take it at the same time.

There are circumstances where an employer can insist that employees take part of their annual leave entitlement. Under the WTR an employer can give notice to staff requiring them to take part of their holiday entitlement on specified dates. The notice given must be at least twice as long as the period of leave the employee is being required to take.

However, this right will have to be exercised carefully. As described above, an employer will need a ‘good reason’ to refuse an employee’s request to use carried-forward leave on a particular day or days. Plainly there is potential for a clash between the rights of the employer under WTR and the rights of employees under the new Regulations.

If you have any questions about the furlough scheme or holiday pay, please email or call our Employment Law team today on 0113 207 0000.