Hassle Free HR – Managing Annual Leave Entitlement 

Many employers and employees have been concerned about how the Coronavirus, or the Job Retention Scheme (furlough), may impact employees being able to utilise their holiday entitlement. In response to this, the Government confirmed that employees who were placed on furlough could still use their holiday entitlement and receive full pay for any holiday entitlement used. As well as this, the Working Time Regulations 1998 have been amended to allow for more flexibility when dealing with holiday entitlement for the remainder of the current holiday year. Due to disruption caused by the Coronavirus, employees may struggle to take their remaining entitlement before the end of the current holiday year. This may be because;

  • They are self-isolating or are too sick to take holiday before the end of the holiday year
  • They have been temporarily sent home because there is no work (i.e. “laid off” )
  • They have had to continue working due to legitimate business needs, and could not take their paid holiday entitlement

The Regulations now give employees a statutory right to carry annual leave over into the next two holiday years after the current one. This change in legislation only applies to the first 4 weeks of leave under the Regulations (Regulations 13 leave). However, existing legislation already permits employers to agree to employees carrying over 1.6 weeks of leave into the next holiday year, so employees can carry over their leave in the following way;

  • 4 weeks (legal entitlement to be carried over to next two leave years)
  • An additional 1.6 weeks (In addition to the above, employers can agree that this be carried over to the next leave year, but not the year after)
  • Enhanced contractual entitlement (at employers’ discretion)

The rules on pay in lieu of untaken annual leave have also been amended so that, when employment ends, the holiday pay payable will include anything carried over and not taken due to the Coronavirus. The law still does not allow pay in lieu of statutory minimum entitlement to be paid at any time other than termination.

Prior to Coronavirus disruption, many employees would have booked periods of holiday leave to travel abroad or to different parts of the UK. However, due to the Coronavirus outbreak, an increasing number of employees may have to change their plans and request to cancel pre-booked periods of holiday leave. Some employees may even choose to do this, with the hope of delaying their leave until later in the year when it is hoped that the situation will not be as severe. Initially, it may have been convenient to let employees cancel their holiday, especially if faced with situations where other employees need to self-isolate. But there are several things to consider.  Employers are legally obligated to provide opportunity for employees to take their full leave entitlements. If your holiday year runs from January to December, you may be concerned about how to manage this.  Usually, it is up to the employer if they let employees cancel pre-booked holiday so you can refuse this request, but in consideration of the disruption caused by Coronavirus, it would be advisable to tread carefully. With tensions running high, and employees likely worried about the implications of Coronavirus, allowing them to cancel periods of pre-booked holiday leave may be a key way of maintaining employee engagement and motivation when it will be required during the months ahead.

Last reviewed on 9 November 2020