Skip to main content

How Holiday Entitlement Works Under the Job Retention Scheme

How Holiday Entitlement Works Under the Job Retention Scheme
Click to enlarge
Managing Director

How does furlough affect employee's holiday entitlement and holiday pay? Can employers dictate when holiday must be taken? How much annual leave can be rolled over into 2021? Your questions answered.

Lockdown (The Original), Lockdown 2 and now the Tier System (Extended Version) means many of us have not taken our traditional holidays this year. In fact, many will not have taken holiday at all although being furloughed may have felt like an enforced holiday! So, how has furlough impacted annual leave entitlement and what will it mean for businesses in 2021?

When Lockdown was implemented, the government passed new emergency legislation (The Working Time (Coronavirus) (Amendment) Regulations 2020, laid before Parliament on 27 March 2020). These regulations decreed annual leave entitlement could be rolled over for up to two years “where the impact of coronavirus means that it has not been reasonably practicable to take it in the leave year to which it relates.” As such, the amendment was designed to protect the holiday entitlement of key workers, such as doctors, nurses, essential retail staff, those in manufacturing or pharmaceutical, and so on, who might not be able to take leave due to COVID-related pressures. The ruling did not cover those who wanted to defer holiday until such time as they could have a ‘proper’ holiday and travel abroad.

“Being unable to take holiday and being unable to take the holiday you want are two different things. We have spoken to many HR Managers and business owners who required clarification as to where they stood, from a legal angle, on this issue. The bottom line is there is no legal requirement to roll over holiday entitlement above what is already set out as company policy. Of course, we always recommend talking with employees and exercising flexibility as far as makes sense from a business viability perspective.” Kimberly Bradshaw, HR Consultant, ASL Recruitment

Under the rules of the Job Retention Scheme, employees continue to accrue statutory holiday entitlement at the same rate as if they have been working, even when furloughed. This could lead to employees building a significant backlog of untaken holiday. To off-set this, employers are permitted to request staff take some of their holiday entitlement whilst on furlough. There is a clear financial benefit to the worker do so as, during furlough, for the most part, workers are paid 80% of their wage. If holiday entitlement is taken, pay increases to 100% for the duration of that holiday although the burden of topping up those wages falls on the company, not on the government.

“It is perfectly understandable many people want to reserve their annual leave until they can have the traditional holiday they might usually enjoy, travelling overseas. However, with so much uncertainty around when travel restrictions would ease, that could mean rolling a substantial part of their holiday entitlement from 2020 into 2021. With the country’s economy and so many businesses struggling with the aftereffects of lockdown, in 2021 when things are hopefully starting to recover, the reality is that’s when businesses are going to need their staff in and working rather than taking double annual leave.” Jason Perry, FCIPD & Managing Director, ASL Recruitment

It is a requirement for businesses to stipulate in employee’s contracts how many days of holiday can be rolled into the following year. So, rather than the employee losing the holiday completely, many companies insisted they took some of the furlough time as holiday. This is permitted under Employment Law as long as the employer gives the employee a notice period equal to double the length of the holiday. Before making the request, the employer is obliged to consider the circumstances under which the employee finds themselves and to determine whether those conditions would prevent them from resting, relaxing and enjoying leisure time, as this forms a fundamental function of taking a holiday.

“If an employee is under restrictions such as the need to self-isolate, employers need to consider whether this would impact their ability to enjoy leisure time as they would not be able to visit open spaces for walks, for example. However, there is a duty of care responsibility of the employer to ensure an employee takes as much holiday as possible in the year in which it is designated to ensure the well-being of the employee. It’s a delicate balance which is why we recommend keeping an open dialogue with staff before making any decisions on stipulating holiday time.” Kimberly Bradshaw

The Job Retention Scheme has now been extended until the end of April 2021. If you have any questions on how it will affect Holiday Entitlement, or any other questions pertaining to HR issues, please get in touch with either Jason or Kimberly, email  [email protected]   for your link to the ASL Employer’s Weekly Conference Call, Wednesdays at 11am, or catch Jason and Kimberly on Thursdays at 10am for HR in 10 live on  YouTube .


ASL Recruitment was established in 1999 and has been serving Hastings and the surrounding area ever since placing temporary and permanent roles across a variety of sectors including Industrial and Manufacturing, Legal, Finance, Marketing, Technology and Office Support, from junior up to board level. Our co-founder and Managing Director,  Jason Perry   is a HR specialist and a Chartered Fellow of the Chartered Institute of Personnel and Development.  Kimberly Bradshaw   is an award-winning HR Professional with an MSc in Organisational Behaviour. For further information on our recruitment or consultancy services, email  [email protected]   or call us on 01424 452999.