You might want to do this. If they take holidays while furloughed then you may be able to claim 80% of their holiday pay. Unfortunately the current guidance does not state explicitly that you will be able to do so but many commentators suggest you will.
Can you insist employees take holidays?
Yes, most probably!
Employers can require employees to take holiday during furlough. It is clear in the Working Time Regulations that providing you give notice that is double the holiday required you can insist on an employee taking leave.
Insisting employees take holiday
If a furloughed employee would normally take Bank holidays (i.e. they are not days on which they would normally work) then they can be required to use a days paid holiday (ACAS). In other cases, employer and employee should agree between themselves. But if it means an employee getting full pay for those two days, then they are hardly likely to object. The action does not disadvantage such employees. For them, Bank holidays deplete total holiday entitlement in normal circumstances.
Do you pay 100% or 80%?
ACAS states that employees (and workers) must get their usual pay in full for holidays, i.e. 100%.
Recent regulations require you to calculate holiday pay over a reference period of the previous 12 months (where not paid as a salary). EU case law (to which we are currently bound) means you must not disadvantage employees by them taking annual leave.
If you were to pay an employee their holiday now, at 80%, then you would be disadvantaging them because, if they took it later, they’d get 100%.
Subject to clarification, the employer can claim back 80% of the holiday pay (subject to the limits in the Coronavirus Job Retention Regulations), which it will not be able to do if the employee takes their holiday later. The employee benefits from full pay. In any event the employer benefits because they will not lose the employee later in the year – or have to accommodate holidays in later years where these are not taken this year due to Covid-19.
*This blog is only a brief summary. Please contact us for advice if you need guidance on a specific situation.
Malcolm Martin FCIPD
Author Human Resource Practice
Blogs are for general guidance and are not an authoritative statement of the law.