Annual leave and coronavirus – what’s the deal?

May 12, 2020 | Good Management

There has been a lot of confusion about how holiday should be handled during this period, so here are five key points to help you manage it.

Cancelling planned holiday

Of course many people have had their travel plans cancelled and will be unable to go on holiday as they normally would. Understandably many people are asking to cancel planned annual leave requests as a result.

You can allow them to do this if you would like to, but you are not under any obligation to allow cancellations, and should remember that if you do, staff will need to take the time off at some point in the future.

Requiring people to take holiday

In most industries employers don’t require staff to take holiday on designated dates, as usually this isn’t necessary. So many managers don’t realise they can do this. In fact as long as you give twice as much notice as the length of time you need people to take off, you can force employees to take leave at times you choose. So if you want people to take a week off, you need to give two weeks’ notice of this.

If you want to allow a bit more flexibility, many employers are implementing a requirement for people to take a certain percentage of their annual leave by a certain date, to ensure there is not a bottleneck of leave right at the end of the year. This helps reduce the backlog of annual leave whilst giving people hopefully a little bit of choice.

Obviously implementing more restrictions about annual leave and/or forcing people to take leave when they can’t go on holiday is not likely to go down well with staff, so if you do it, you should ensure you communicate very well about the reasons for doing so, and treat staff as fairly as you can possibly manage.

Ultimately, for many businesses, it will simply not be manageable to allow staff to continue to accrue lots of annual leave without taking it, as this will make staffing incredibly difficult later on, just as the business is trying to recover from coronavirus. Protecting the business will protect people’s jobs, so making unpopular decisions now might be in the longer-term interests of your employees.

Carrying over holiday

There have been new regulations published relaxing the carryover rules for annual leave. Normally it is necessary to take at least four weeks’ annual leave during the relevant holiday year, and to carry over no more than 1.6 weeks.

However the new regulations have made provision for up to four weeks to be carried over and used up over the next two years.

The important thing to note is that this change only applies where workers have been unable to take their annual leave because of coronavirus factors. This is most likely to apply to key workers in industries working at full pelt to cope with dealing with the virus.

Many workers will want to carry over lots of holiday where possible. They will have been unable to do what they would normally do whilst on annual leave this year, and will feel ‘hard done by’, understandably. And many are hearing about extra carry over provision and are assuming that they are entitled to carry lots of holiday over to take at a time of their choosing at a later date when they can perhaps go away or at least their activities are not as restricted.

But this only applies where it is not possible for them to take it, not because they would prefer not to take it. So if it is possible for your workers to take their annual leave, you should ensure they do so, as allowing too much carry over will only cause problems later.

Holiday during furlough

Initially it wasn’t clear whether this would be allowed under the terms of the Coronavirus Job Retention Scheme, however it is now clear that employees being on annual leave (including bank holidays) while on furlough won’t jeopardise the minimum three-week requirement for furlough funding.

Whilst many businesses may be suffering financially at this time, and therefore not able to afford to pay staff more than the 80% they are getting funded by the government, it’s worth bearing in mind that if you end up making staff redundant, you will have to pay them at 100% for holiday accrued and not taken, and this will not be funded by the government.

In addition, if they stay on furlough but the furlough funding is reduced from 80% to a lower figure, the amount you will have to pay to top up will be increased. Holiday taken when furlough is at 80% will only cost you 20% of pay, so doing it now if at all possible could save your business significant money in the medium term.

How much to pay people on holiday

If staff are on furlough they are usually only receiving 80% of their pay, unless you are topping it up. But what happens if you want them to take some annual leave at this time? In that case you will need to top up their pay to their normal 100% rate.

The key thing to remember is that staff on holiday should receive their ‘normal’ pay. If they are on fixed salary, you should pay them at their normal rate. If they are on variable pay, you should calculate their holiday pay based on the average earnings over the last 52 weeks.


If you’d like some advice about managing holiday during the coronavirus pandemic, do get in touch.