The Government guidance said staff on furlough will continue to accrue annual leave as per their employment contract.
Employers can agree to vary holiday pay entitlement with furloughed staff, as part of the furlough agreement, however, many workers are entitled to 5.6 weeks of statutory paid annual leave each year, which cannot be reduced.
Working Time Regulations (WTR) mean holiday pay has to be paid at the employee’s normal rate of pay or, where pay is variable, calculated on the basis of average pay received in the previous 52 weeks.
Therefore, if an employee takes holiday while on furlough, the employer should pay their usual holiday pay in accordance with WTR.
Employers will be obliged to pay the additional amounts over the grant (the extra 20% on top of the 80% grant given by the Government) but will have the flexibility to restrict when leave can be taken if there is a business need. This applies for the furlough period and the recovery period.
If employees usually work bank holidays, the employer can agree this is included in the grant payment.
If a worker usually takes bank holidays as leave, the employer would have to either top up the pay to the usual holiday pay or give a day off in lieu.
Amid the coronavirus pandemic, the Government stated the policy on holiday pay during furlough will be kept under review.
Also, pub employers can continue training their staff even if they have been furloughed on its guidance for the Coronavirus Job Retention Scheme.
Furloughed employees are entitled to be paid at least their appropriate national minimum wage for this time.
Firms will also need to pay additional wages if a worker’s time spent training means they go over the minimum wage entitlement.
However, the Government said it expected the furlough payment of 80% of an employee’s regular wage would be enough to cover training hours.