As we approach the end of the year, it’s usually about this time we consider communicating with employees about what will happen to any outstanding annual leave they have. Do we have a ‘use it or lose it policy’ and have we reminded employees, do we allow it to be carried across to the new holiday year, how should holiday pay be calculated? This year has certainly been like no other so our blog this month aims to support you in managing annual leave and pay.
What to do with outstanding holidays?
In a year which has been blighted with a pandemic we are seeing more than ever that employees have been unable to take their accrued holidays for various reasons. This could be due to the financial circumstances whilst utilising the furlough scheme, because demand is high and employees haven’t been able to ‘find time’ to take them or maybe it’s because people were hoping to save their holidays until they could book that flight to Gran Canaria which hasn’t been possible.
Regardless of the reasons why, the Working Time Regulations have been updated to allow for workers to carry over up to 4 weeks of annual leave where it was not “reasonably practicable” to take this leave as a result of the effects of coronavirus. The unused leave can now be taken in the 2 leave years immediately following the year in respect of which it was due to be taken i.e. in 2021 and 2022. This has been a useful development but may not be practicable to allow for large numbers of holidays to be carried forward.
Therefore, another option could be to request employees to take all or some of their annual leave. It’s important to note that if you want to do this you should check that you have the contractual right to do so and make sure that you give employees enough notice. In order to enforce the use of annual leave you must give the employee two times the notice of the time period you want them to take. For example, if you want them to take 5 days annual leave, you must give them 10 days’ notice.
Holidays whilst on Furlough
Employers should remember that employees can take holiday whilst on furlough. They should make sure that employees are paid 100% of their pay whilst on holiday, but since it doesn’t count as a break in furlough, employers can still continue to claim for 80% of that back from the CJRS Scheme.
Calculating Holiday Pay
We also think it is worth the reminder that the rules changed this year on calculating holiday pay. Specifically, the reference period for calculating variable hours holiday pay has changed from the previous 12 weeks to the previous 52 weeks.
New Bank Holidays – NEW ANNOUNCEMENT
Whilst this won’t be applicable until 2022 it’s good news for some, nonetheless. With the Queen’s platinum jubilee occurring there will be an additional Bank Holiday on Friday 3rd June 2022. May day is also moving to Thursday 2nd June which will create a 4 day weekend for the event.
It’s important to check the wording in your employee’s contract to determine whether or not they will be entitled to this extra day of holiday on a contractual basis. If your wording only entitles them to 8 public holidays then you don’t have to provide them with an extra day. Of course, you can still decide to allow the extra Bank Holiday if you choose to do so.
For further advice on any HR matter, you can contact our HR Consultancy Team on 01302 341 344.
By Kris Kerins BSc (Hons) PGC (Tech Mgmt) – HR Business Partner