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• on the revised Coronavirus Job Retention Scheme (CJRS), see Practice Note: Coronavirus Job Retention Scheme (revised version from 1 July 2020)
• on holiday and holiday pay during the coronavirus (COVID-19) pandemic, see Practice Note: Coronavirus (COVID-19)—holiday and holiday pay
• on holiday and holiday issues generally, see Practice Notes: Holiday and Holiday pay
It is clear that:
• employees can take holiday while on furlough
• the legal framework for calculating holiday pay applies to furloughed workers exactly as it applies to those not on furlough
See the section of Practice Note: Coronavirus (COVID-19)—holiday and holiday pay entitled: ‘Furloughed workers’, under the heading ‘Holiday pay’.
The BEIS guidance Holiday entitlement and pay during coronavirus (COVID-19) has not been updated since it was first published in May 2020, and does not deal specifically with flexible furlough under the revised CJRS. However, it sets out in relation to workers who have been placed on furlough that:
• they continue to accrue statutory holiday entitlements, and any additional holiday provided for under their employment contract
• they ‘can take holiday without disrupting their furlough’, ie the taking of holiday will not contravene the CJRS rules and so will not jeopardise the claim for their pay being made under the scheme
• the notice requirements for their employer requiring a worker to take leave or to refuse a request for holiday continue to apply
• employers should ‘engage with their workforce and explain reasons for wanting them to take leave before requiring them to do so’ at a particular time, and
• if an employer requires a worker to take holiday while on furlough, the employer should ‘consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday’
See the section of Practice Note: Coronavirus (COVID-19)—holiday and holiday pay entitled: ‘Furloughed workers’.
The HMRC guidance Steps to take before calculating your claim using the CJRS was amended on 1 July to state that:
• if an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours
• employees should not be placed on furlough for a period simply because they are on holiday for that period
This amendment is presumably designed to ensure that an employer can makes claims under the revised CJRS for flexibly furloughed employees (who may, eg be working a rota of a period working and then a period on furlough) without having to nominally bring them back to work in order for them to take a period of pre-arranged holiday. This is consistent with the BEIS guidance (mentioned above) which provides that employees ‘can take holiday without disrupting their furlough’. However, the second element of the additional guidance indicates that HMRC may perhaps investigate a situation where an employee is placed on flexible furlough and is on holiday for that entire period.
This would suggest that, where an employee is working for part of the working week (working hours) and is on furlough for the remainder of the working week (furloughed hours), if the employee then wishes to take a week’s holiday (or the employer wishes to designate a week’s holiday):
• the employee can take holiday for the full week
• the employer can continue to claim under the revised CJRS in respect of the furloughed hours
• the employer will need to ‘top-up’ the employee’s pay in respect of those furloughed hours to the rate of holiday pay to which the employee is entitled (ie based on their usual earnings)
• the employer will need to also pay the employee their holiday pay for the working hours
Given that the HMRC guidance states that employees should not be placed on furlough for a period simply because they are on holiday for that period, it would seem that, on receiving a request for a week’s holiday from an employee who is flexibly furloughed, the employer cannot simply designate the whole of that week as a week of furlough, claim the furlough grant for the whole week, and then top up the employee’s pay for that week to the correct level of holiday pay; the employer is restricted to claiming the furlough grant only in respect of the furloughed hours.
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