Changes to annual leave rules

As an employer it is important to encourage annual leave to be taken by your employees to ensure people are getting enough rest and keeping themselves healthy – both physically and mentally.

Due to the numerous scenarios which have arisen during 2020 due to the pandemic, it may not have been practical for employees to take all of their annual leave in the holiday year.

How does the new government scheme regarding carrying over holiday work?

Earlier this year, the government announced that if annual leave was not used up this year that up to 4 weeks’ paid holiday can be carried over into an employee’s next 2 holiday leave years. The measures will ensure workers won’t lose their leave entitlements and provides flexibility to businesses at a time when it is needed most

This new law applies for any holiday the employee does not take because of coronavirus, for example:

If an employee has had to self-isolate or they are too sick to take holiday before the end of their leave year

Or, they have needed to continue working throughout the year and thus could not take paid holiday

It is important however, that employers still encourage workers and employees to take their paid holiday and that requests should still be made throughout the holiday year, if this is possible for the business.

Can an employee or worker who has been placed on furlough during the year carry over annual leave?

Yes – if they cannot reasonably use it in their holiday year. However, it is also possible for the employer to include the monthly allowance of holiday in an employee’s pay each month by topping up their salary to 100% for the holiday pay. This way the employee is taking annual leave as they accrue it each month and therefore not building up holiday entitlement to take at a later date.

As the employer, can I tell an employee that holiday must be taken over a specific period?

Yes. Employers have the right to tell any employee or worker when to take holiday in a year. The only exception to this is for any employees who are on sick leave or family leave (e.g. maternity or paternity leave).

However, it is important to remember that if an employer decides to specify dates when employees should take annual leave, they must tell staff at least twice as many days before as the number of days they need employees to take. For example, if an employer was to close the business for 1 week over the Christmas period and ask all employees to take annual leave for the week, then they must give the employee at least two weeks’ notice.

Can an employer cancel any pre-booked employee holiday?

Yes, an employer can also cancel pre-booked paid holiday. If they make the decision to do this then they must give staff at least the same number of days’ notice as the original holiday request.

For example, if an employee has booked 7 days holiday, the employer must tell them at least 7 days before the holiday starts that their leave request has been cancelled.

This could however distress staff and have at a financial impact on staff who have already booked and paid for holidays therefore employers should ensure that they give a clear explanation for their decision and try and resolve any worries about how their plans have been affected. It is advised that this option should also only be used as a last resort.

Dealing with holiday during COVID-19 as an employer

Everyone, employers and employees, should be as flexible as possible about holiday and annual leave during the current pandemic.

As an employer, it may be a good idea to set the following expectations out to employees early on:

• Discuss why holiday might need to be taken or cancelled and outline periods of time within the year when it would best suit the company for annual leave to be taken
• Talk about employees plans to use or cancel holiday as soon as is possible
• Consider everyone’s physical and mental wellbeing
• Listen to concerns from people across the business and ensure communication is open throughout

Anna Craig, Managing Consultant, Bradfield HR