If you have employees on furlough can they take holiday, and if so at what rate must you pay them? How did the calculation for holiday pay change in April?
Furlough and holiday.
Employees can take holiday whilst on furlough and you can designate time during furlough to be taken as holiday as long as you give notice that is double the amount of time required to be taken. Employees are also required to ask permission to take or change holiday dates, observing the double notice rule.
Where holiday is taken during furlough it must be paid at 100% of earnings, so you may feel you have to refuse requests if you cannot afford this top up from the 80% furlough cap.
April 2020 changes.
From 6 April 2020 employees with contracts drawn up under the Employment Rights Act 1996 (Great Britain but not Northern Ireland), have their 5.6 weeks’ holiday entitlement calculated based on their earnings over the last 52 weeks prior to their holiday, or if they have not been employed for 52 weeks, the maximum number of weeks they have received pay for working for the employer. An employer must go back a maximum of 104 weeks to retrieve up to 52 weeks of pay. The first four weeks’ entitlement is based on “normal remuneration” which derives from case law and incorporates commission, bonus and any overtime. The additional 1.6 weeks are based on “the value of a week’s pay” and this can be taken to be basic pay rather than including additional variable pay.
For those with very casual contracts each hour worked can generate holiday entitlement of 12.07% of an hour. However, when holiday is taken the pay must be calculated using the 52-week rule. It’s not acceptable to give rolled up holiday pay by paying an additional amount equivalent to 12.07% of the hourly rate, rather than an employee taking paid time off.
These are not additional days of holiday unless the employee’s contract designates them as such. So, if the contract is silent, they are just part of the 5.6 weeks’ (28-day) entitlement.
Payment in lieu of holiday.
This can only happen if an employee’s contract is terminated or for any entitlement in excess of 5.6 weeks.Furloughed employees can take holiday, but it must be paid at 100% of earnings. Since 6 April employees with variable pay must have their holiday pay calculated based on their last 52 weeks of work.
What to do next.
For further information on this and other topics contact Tony on 07974-418819 or email at email@example.com or through the contact page of the website http://www.milestone-solutions.co.uk