Carrying over holiday entitlement and further details of the Coronavirus Job Retention Scheme announced

29th March 2020 The Government has announced that it will introduce amendments to the Working Time Regulations to enable holiday entitlement to be carried over for up to 2 years. This proposal is aimed to ensuring that key workers and other workers that have had to work extra hours and shifts in the current medical crisis are not permanently deprived of their holiday entitlement due to the fact they have had to forego holiday leave due to the current pressures of work on them. It should be noted that the entitlement to paid holiday leave applies to “workers” and is not limited to just “employees”-a wider group of people are entitled to this than simply “employees”. Therefore, people that work for a business as casual staff or zero hours workers will be able to the benefit of this change.

One complication of the proposal is that the proposal will not apply to the full amount of a person’s annual holiday entitlement. Instead, it will apply to 4 weeks worth of the annual entitlement, not the current 5.6 weeks annual entitlement. In other words, for a full- time employee that works the traditional 5 day week the normal annual entitlement under UK law is 28 days paid holiday. However, this proposal will only apply to 20 days of that annual entitlement. In terms of the practicalities, we expect that the usual rules will apply over booking the holiday in future years. Furthermore, employers will need to keep careful records in order to keep a track of how much holiday each employee will be able to carry over under this proposal.

We wrote recently about the Coronavirus Job Retention Scheme (also known as the Furlough Scheme). Since then the UK Government has announced further details of the Scheme, and in doing so have answered some of the outstanding questions about the Scheme.

We anticipate that there may well be further clarification through relevant legislation.

The Scheme can only be used by employers that had a PAYE scheme in place by the 28thFebruary 2020. This indicates that businesses that commenced in March will not be able to access the Scheme - although in current circumstances that is likely to cover very few businesses.

Of those businesses that can access the Scheme it will only apply to those employees that were in employment by the 1st March 2020. Clearly, this restriction is intended to limit the potential for abuse of the Scheme and stop employers from hiring their spouses, parents, siblings or friends after the Scheme was announced. Sadly, there will probably be some innocent losers arising from this restriction, such as people that received and accepted a legitimate offer of employment to start after the 1st March 2020.The Scheme will not help those people. Employers will need to decide if they can afford to pay those people the agreed salary in full, or agree a reduced rate of pay or reduced hours of work for them, or see if it is possible for them to do their work from home.

On the other hand, there is some potential respite for other staff that may have lost their jobs this month, as the further details indicate that a business can re-employ people who have been made redundant since the 1st March2020, and then place them on furlough leave. Obviously if an employer does this, they will need to consider the viability of the individual’s role after the furlough period.

Most businesses will be eligible to access the Scheme. Any organisation with employees can apply. This will include charities as well as commercial businesses.

Turning to agency employees, the end user (ie the client of the agency) will not normally be able to access the Scheme in relation to the agency staff they have used. Instead, the agency- if the agency is the party that pays the employee through their PAYE system, will be able to access the Scheme in relation to those agency staff- subject of course to the employee doing NO work. liability Public sector employees are not expected to be included within the Scheme as central Government expects to continue funding wages in the usual manner.

The minimum period of furlough leave will be three weeks. It appears that it will be taken in three- week blocks. It does seem that an employer can require staff to rotate in taking the furlough leave, so long as each individual is on leave for a minimum block of three weeks.

In order to receive the payment, the staff selected for “furlough leave” must provide NO work for the business during the leave period. Therefore, it cannot apply to any staff that work from home, or work on reduced hours or a reduced rate of pay. This means that employers need to make careful decisions as to how they manage any continuing work orders and needs, and how many staff they select to go on furlough leave.

Helpfully, the latest guidance indicates that employers can reclaim of up to 80% of wage costs up to £2,500 per month PLUS (rather than including) the associated employer’s National Insurance contributions, and auto-enrolment pension contributions on that wage. The figure will not include or cover the bonuses or commission payments that the employee may normally get or expect to receive alongside their basic pay. This begs the question of how this will apply to those employees that have variable pay. The new guidance indicates that in such cases the 80% will be based on the higher of the same month’s earnings in the previous year (eg earnings in March 2019); or the average monthly earnings in the 2019-2020 tax year.

Employers may still opt to top-up the furlough pay to 100% of the employee’s usual pay. In order to reduce the risk of any employee presenting a claim for the balance employers should agree the change, and the 80% pay rate during the furlough period, with each employee. The Government guidance has consistently made it clear that the usual requirements of employment law apply- which will require negotiation and agreement with each employee (unless the existing contract of employment specifically authorises the reduction in pay and hours of work-which is very unusual).

Any employee that is off sick, or is self-isolating cannot be placed on furlough leave, and cannot receive the 80% payment. If does appear that once any such employee ends their period of sickness absence of self-isolating, they may be included in the furlough scheme.

At present the Government is still indicating that the Scheme will become operational in April, but once operational claims will be able to be backdated as far back as the 1st March 2020.

Employers will still rightly be concerned about how they deal with staff before the Scheme becomes operational. The Government has simply reminded businesses of the ability to apply for some direct financial support in that period.

We can help your business in preparing correspondence for staff to explain the need to agree a reduction in pay in the furlough period, and for furlough leave, and provide a suitable form of agreement for the staff to demonstrate and prove agreement to such changes. Simply imposing the change on employees, without clear agreement runs risks of employers facing potential claims for wages and potential discrimination claims.


One complication of the proposal is that the proposal will not apply to the full amount of a person’s annual holiday entitlement. Instead, it will apply to 4 weeks worth of the annual entitlement, not the current 5.6 weeks annual entitlement. In other words, for a full- time employee that works the traditional 5 day week the normal annual entitlement under UK law is 28 days paid holiday. However, this proposal will only apply to 20 days of that annual entitlement. In terms of the practicalities, we expect that the usual rules will apply over booking the holiday in future years. Furthermore, employers will need to keep careful records in order to keep a track of how much holiday each employee will be able to carry over under this proposal.

We wrote recently about the Coronavirus Job Retention Scheme (also known as the Furlough Scheme). Since then the UK Government has announced further details of the Scheme, and in doing so have answered some of the outstanding questions about the Scheme.

We anticipate that there may well be further clarification through relevant legislation.

The Scheme can only be used by employers that had a PAYE scheme in place by the 28thFebruary 2020. This indicates that businesses that commenced in March will not be able to access the Scheme - although in current circumstances that is likely to cover very few businesses.

Of those businesses that can access the Scheme it will only apply to those employees that were in employment by the 1st March 2020. Clearly, this restriction is intended to limit the potential for abuse of the Scheme and stop employers from hiring their spouses, parents, siblings or friends after the Scheme was announced. Sadly, there will probably be some innocent losers arising from this restriction, such as people that received and accepted a legitimate offer of employment to start after the 1st March 2020.The Scheme will not help those people. Employers will need to decide if they can afford to pay those people the agreed salary in full, or agree a reduced rate of pay or reduced hours of work for them, or see if it is possible for them to do their work from home.

On the other hand, there is some potential respite for other staff that may have lost their jobs this month, as the further details indicate that a business can re-employ people who have been made redundant since the 1st March2020, and then place them on furlough leave. Obviously if an employer does this, they will need to consider the viability of the individual’s role after the furlough period.

Most businesses will be eligible to access the Scheme. Any organisation with employees can apply. This will include charities as well as commercial businesses.

Turning to agency employees, the end user (ie the client of the agency) will not normally be able to access the Scheme in relation to the agency staff they have used. Instead, the agency- if the agency is the party that pays the employee through their PAYE system, will be able to access the Scheme in relation to those agency staff- subject of course to the employee doing NO work. liability Public sector employees are not expected to be included within the Scheme as central Government expects to continue funding wages in the usual manner.

The minimum period of furlough leave will be three weeks. It appears that it will be taken in three- week blocks. It does seem that an employer can require staff to rotate in taking the furlough leave, so long as each individual is on leave for a minimum block of three weeks.

In order to receive the payment, the staff selected for “furlough leave” must provide NO work for the business during the leave period. Therefore, it cannot apply to any staff that work from home, or work on reduced hours or a reduced rate of pay. This means that employers need to make careful decisions as to how they manage any continuing work orders and needs, and how many staff they select to go on furlough leave.

Helpfully, the latest guidance indicates that employers can reclaim of up to 80% of wage costs up to £2,500 per month PLUS (rather than including) the associated employer’s National Insurance contributions, and auto-enrolment pension contributions on that wage. The figure will not include or cover the bonuses or commission payments that the employee may normally get or expect to receive alongside their basic pay. This begs the question of how this will apply to those employees that have variable pay. The new guidance indicates that in such cases the 80% will be based on the higher of the same month’s earnings in the previous year (eg earnings in March 2019); or the average monthly earnings in the 2019-2020 tax year.

Employers may still opt to top-up the furlough pay to 100% of the employee’s usual pay. In order to reduce the risk of any employee presenting a claim for the balance employers should agree the change, and the 80% pay rate during the furlough period, with each employee. The Government guidance has consistently made it clear that the usual requirements of employment law apply- which will require negotiation and agreement with each employee (unless the existing contract of employment specifically authorises the reduction in pay and hours of work-which is very unusual).

Any employee that is off sick, or is self-isolating cannot be placed on furlough leave, and cannot receive the 80% payment. If does appear that once any such employee ends their period of sickness absence of self-isolating, they may be included in the furlough scheme.

At present the Government is still indicating that the Scheme will become operational in April, but once operational claims will be able to be backdated as far back as the 1st March 2020.

Employers will still rightly be concerned about how they deal with staff before the Scheme becomes operational. The Government has simply reminded businesses of the ability to apply for some direct financial support in that period.

We can help your business in preparing correspondence for staff to explain the need to agree a reduction in pay in the furlough period, and for furlough leave, and provide a suitable form of agreement for the staff to demonstrate and prove agreement to such changes. Simply imposing the change on employees, without clear agreement runs risks of employers facing potential claims for wages and potential discrimination claims.

If you need any further advice on any matter raised in this article do not hesitate to contact us at Hallett Employment Law Services Ltd.