Employer putting staff on Furlough if they take holiday

JCS1

sillyvixen said:

Surely if you are furloughed you get 80% of pay at the government's (tax payers) expense, if you are taking paid holiday during the time of furlough it is the company's responsibility to fund holiday pay at 100%! If your employers want you to use your holiday allowance as they have no work for you they have to fund it.

Holiday pay is at 100%, but if the person is on furlough the employer would get 80% from government, so it would only cost them the 20% top up

Jeremy535897

A_Lert said:

If your employer intends to reduce your holiday pay then I think at best they're on dubious grounds.

If your employer will pay you your full holiday pay, then their plans go against what the government says, which is that "Employees should not be placed on furlough for a period simply because they are on holiday for that period." However in a sense this is none of your business - it's between your employer and HMRC whether their Coronavirus Job Retention Scheme is valid or not.

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme#when-furlough

It has always been the case that employers could oblige employees to take holiday while on furlough. When employees were furloughed for up to six months, it would have led to impractical amounts of holiday entitlement building up in a period when economic recovery could least afford it. There is lots of government guidance on pay levels whilst furloughed and on holiday, the main upshot of which is that the rate of pay should be the "normal" rate rather than the furlough rate (an oversimplification of a complex area, but one which most employers adopt). The quote you give is that the government would not expect an employer who is not furloughing employee X to put them on furlough specifically for their holiday, and take them off immediately on their return.

cbsexec

Glad to see this last comment is a correct one.  Employers must make up the 20% if making employees use their holiday entitlement 

Jeremy535897

cbsexec said:

Glad to see this last comment is a correct one.  Employers must make up the 20% if making employees use their holiday entitlement 

As I said, this is an oversimplification, for two reasons in particular:

• technically the "normal" requirement, which derives from EU case law, applies to only 20 of the 28 days statutory minimum holiday entitlement
• where wages fluctuate, and people come on and off furlough, the averaging over the previous 52 weeks (up to 104 weeks) could produce a varying outcome

Understandably most employers just pay the "normal" rate.

Grumpy_chap

The initial reaction to this is that it seems wrong that employers can use furlough to subsidise the holiday payments to employees that the business would need to meet those costs in any case.

However, these are not normal times and many businesses are really struggling.  It must be remembered that an employee on furlough at 80% salary is not "zero cost" to the employer.  The employer continued to incur NI costs, plus some "perks" such as company car could not simply be cut, plus employees continued to accrue annual leave while on furlough.

That means there are people who have taken 3 months, 6 months, or even more as furlough at 80% and in that time accrued 2 weeks annual leave that the employer has to pay for.  By the end of the furlough scheme, some employees may have been on furlough for a whole year and accrued 4 weeks (or more) annual leave.  During first lockdown (3 months) it seemed to be accepted that if an employee was on furlough but had annual leave pre-booked, the employee could stay on furlough and take annual leave and then the employer just needed to "top up" 80% to 100%.  Employers doing the same for people that are back at work but then take a couple of weeks annual leave is no different.

I don't think it is correct, or as the scheme intended, but in the overall scheme of things if this annual leave for employers that are back in trade is covered by furlough and that helps the businesses survive, it is probably not a massive expense to HM Treasury in the grander picture.

With hindsight, there are a lot of parts of the furlough scheme that could have been written better.  Maybe, one of those things would be that an employee on furlough does not continue to accrue annual leave.  The issue is, furlough was introduced at break-neck speed and some anomalies are inevitable.

We need to move to a point where furlough is not continuously extended and business find a way to structure that is COVID-19 secure and viable.  Even taking into account the uncertainties of further lockdowns.

Vekin1971

I am no expert but my employer did this over the summer, when we took holidays they the furloughed us they still paided up 100% of our wages.  In practice they used the gov to subsidise our holiday pay.   
That said the company later came back and asked us to sign over our holidays to the company as they could not take them off us as we had being furloughed.  

epm-84

Jeremy535897 said:

cbsexec said:

Glad to see this last comment is a correct one.  Employers must make up the 20% if making employees use their holiday entitlement 

As I said, this is an oversimplification, for two reasons in particular:

• technically the "normal" requirement, which derives from EU case law, applies to only 20 of the 28 days statutory minimum holiday entitlement
• where wages fluctuate, and people come on and off furlough, the averaging over the previous 52 weeks (up to 104 weeks) could produce a varying outcome

Understandably most employers just pay the "normal" rate.

The EU requirement is so that a full time worker who works Tues-Sat has the same statutory entitlement as someone who works Mon-Fri, despite most of the Bank Holidays falling on Monday.  It also benefits part time workers who don't work Mondays and ensures part time workers who do work Monday don't get an unfair statutory entitlement in their favour.  Some employers give part time workers a holiday allowance inclusive of Bank Holidays and if a BH falls on one of their normal working days (meaning the office is closed) then they have to book it in as a holiday.  For example, someone working Mon-Fri might get 25 days to book in and will also get BHs off, while someone working Tues-Fri will get 26.5 days in total and will have to take one of those days on Good Friday.

An employer offering more than the legal minimum can reduce the entitlement as part of the furlough agreement but unless they have and the employee has agreed to it, they must stick to the terms of the employment contract.