Employment Law Update – “Furlough Leave” – Annual Leave update 09.04.2020

News Posted: April 9, 2020

Solicitors in Shropshire

“Furlough Leave” – The Coronavirus Job Retention Scheme – update re Annual leave 09.04.2020

Annual Leave Update

In our earlier Newsletter of 6th April, we explained that the interaction between annual leave and furlough leave was at that time still unclear.

We know that whilst on Furlough leave employees will continue to accrue holiday in the normal way, but the un-answered question is whether they can take it (or be placed on it).

One concern arising from this is whether HMRC would take the view that an employee taking a period of holiday leave during furlough leave meant that any three-week period of furlough leave was interrupted (meaning that furlough payments would not be granted to the employer for the relevant period)

Do we have clarification on this point?

First, a potential answer from HMRC appeared on Twitter earlier this week!

Its Customer Support Team earlier this week stated (in answer to a question on the above issue) that:

If an employee is on holiday or has a scheduled Bank Holiday while on furlough, they are entitled to still receive this holiday. Employers must ensure that any employee on holiday or a Bank Holiday is paid their full salary for that period of holiday.’

In addition, HMRC customer support team stated that the Coronavirus Job Retention Scheme ‘will only pay for the furlough paid, everything else is to be paid by the employer‘.

In other words, the employer must pay the difference between the furlough pay and full pay that difference being 20%.

Second, updated ACAS Guidance states:

If an employee or worker is temporarily sent home because there’s no work and the employer intends to claim for their wages under the Coronavirus Job Retention Scheme (‘furloughed’), they can still request and take their holiday in the usual way. This includes bank holidays.

Employees and workers must get their usual pay in full, for any holidays they take.’

Employers will have to ensure that they calculate an employee’s normal salary correctly to ensure that any individual taking holiday leave is not underpaid bearing in mind that latest HMRC Guidance on The Coronavirus Job Retention Scheme is now clear that normal salary can include overtime, allowances, compulsory commissions and bonuses.

Despite the above, it is advisable that employers await definitive updated Guidance from HMRC on The Coronavirus Job Retention Scheme regarding the relationship between holiday and Furlough leave.

If you are either an employer or employee and require further advice on the effects of COVID-19 contact Hatchers Solicitors’ Employment Law Team on 01743 248545.

The content of this Newsletter is descriptive of its subject matter only and must not be relied upon as providing specific legal advice.
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