Holiday Pay And Furlough

Holiday Pay And Furlough

With the summer holidays fast approaching, furloughed employees might be thinking about taking part of their annual leave entitlement which has continued to accrue during their time away from work.

As we move into the next phase of the Coronavirus Job Retention Scheme (Scheme) and more employees are being brought back into the workplace on flexible furlough arrangements, questions are increasingly being asked about how the issue of holiday will be dealt with.

Government guidance states that any holiday taken by a flexibly furloughed employee will be treated as time spent on furlough as opposed to time spent working. This will enable the employer to claim via the Scheme for the wages of the employee whilst they are on holiday, even though they may have returned to work on a part time basis. The employer is of course still required to ‘top up’ the wages such that the employee receives full pay for the holiday period.

However, there was uncertainty as to whether this would allow employers to place an eligible employee who had booked holiday on furlough for this period solely in order to claim back a proportion of that employee’s holiday pay via the Scheme.

The latest version of the government’s guidance makes it clear that this practice is prohibited, stating that “Employees should not be placed on furlough for a period simply because they are on holiday for that period”. This means an employer will have to stand the full cost of an employee’s holiday pay entitlement if they take holiday after returning to work from furlough and cannot seek to make a claim via the Scheme by re-furloughing them for the holiday period.

The updated guidance also confirms that employers can attempt to negotiate a change in an employee’s contractual terms such that any annual leave over and above their statutory leave entitlement does not accrue during furlough. However, this may make furlough less attractive to employees (whose consent is required before they can be placed on furlough). The guidance states that any variation to holiday entitlement must not fall below the statutory 5.6 weeks paid annual leave.

If you have any questions about holiday and flexible furloughing, please e-mail Blacks Solicitors at