Holiday entitlement for furloughed employees

on December 23, 2020

Almost all workers, including zero-hour contracted workers and those on irregular hour contracts, are legally entitled to 5.6 weeks’ paid holiday per year. The exception is those who are genuinely self-employed.

For the purposes of calculating holiday entitlement, the statutory 5.6 weeks entitlement is split into 4 weeks derived from EU law, and an additional 1.6 weeks from UK law. This guidance focuses on the legal minimum entitlement of 5.6 weeks. Many workers have contracts that entitle them to additional paid holiday beyond this, known as contractual holiday entitlement. Workers and employers can agree to alter the terms of the worker’s contract, providing it does not go below the statutory minimum of 5.6 weeks.

A worker has the same holiday entitlement, regardless of whether they are on sick leave, maternity leave, parental leave, adoption leave and other types of statutory leave. A worker may request holiday while they are on sick leave but are not required to take it.

Furloughed workers

Workers who have been placed on furlough continue to accrue statutory holiday entitlements, and any additional holiday provided for under their employment contract.

Workers on furlough can take holiday without disrupting their furlough. The notice requirements for their employer requiring a worker to take leave or to refuse a request for leave continue to apply. Employers should engage with their workforce and explain reasons for wanting them to take leave before requiring them to do so.

If an employer requires a worker to take holiday while on furlough, the employer should consider whether the worker is under any restrictions. Such as, if the worker needs to socially distance or self-isolate. This would prevent the worker from resting, relaxing, and enjoying leisure time, which is the fundamental purpose of holiday.

Taking holiday

Employers can:
  • require workers to take holiday
  • cancel a worker’s holiday if they give enough notice to the worker
The required notice periods are:
  • double the length of the holiday if the employer wishes to require a worker to take holiday on particular days
  • the length of the planned holiday if the employer wishes to cancel a worker’s holiday or require the worker not to take holiday on particular dates


Bank holidays

There is no statutory right to take time off work during bank holidays. Employers can include bank holidays as part of a workers’ statutory holiday entitlement if they choose, but do not have to do so.

Where necessary, employers can require workers who would usually take bank holidays as holiday to work instead, using the standard notice periods. Employers must still ensure that the workers receive their statutory holiday entitlement for the year.

When a bank holiday falls inside a worker’s period of furlough and the worker would have usually worked the bank holiday, their furlough will be unaffected by the bank holiday. However, if the worker would usually have had the bank holiday as annual leave, there are 2 options.

1.     The bank holiday is taken as annual leave

If the employer and the worker have agreed that the bank holiday can be taken as annual leave while on furlough, the employer will have to pay the correct holiday pay for the worker. Employers may also require workers to take the bank holiday as annual leave with the correct notice periods.

2.     The bank holiday is deferred

If the employer and the worker have agreed that the bank holiday will not be taken as annual leave at that time, the worker will  still have to receive that day of annual leave that they are entitled to. This holiday can be deferred till a later date, but the worker should still receive their full holiday entitlement.

Holiday pay

The pay that the worker receives for the holiday they take depends on the number of hours they work and how they are paid for those hours. The principle is, the pay received by a worker while they are on holiday should reflect what they would have earned if they had been at work.

An employer cannot pay an employee reduced holiday pay while the employee is on furlough, unless the pay is the same as when is/was working.

If a worker on furlough takes annual leave, an employer must calculate and pay the correct holiday pay in accordance with current legislation. Where this calculated rate is above the pay the worker receives while on furlough, the employer must pay the difference. However, as taking holiday does not break the furlough period, the employer can continue to claim the 80% grant from the government. This could be used to cover most of the cost of holiday pay.

Carrying leave forwards: how new legislation has changed the rules

The government has passed a new emergency legislation, this is to ensure businesses have the flexibility they need to respond to the Coronavirus pandemic. Its also to protect workers from losing their statutory holiday entitlement (The Working Time (Coronavirus) (Amendment) Regulations 2020, laid before Parliament on 27 March 2020). These regulations enable workers to carry holiday forward where the impact of Coronavirus has made it unpractical to take it in the leave year to which it relates.

Where it has not been reasonably practicable for the worker to take some or all the 4 weeks’ holiday due to the effects of coronavirus, the amount of holiday days not used may be carried forward into the following 2 leave years. When calculating how much holiday a worker can carry forwards, employers must give workers the opportunity to take any leave that they cannot carry forward before the end of the leave year.

Workers who are on furlough are unlikely to need to carry forward statutory annual leave, as they will be able to take it during the furlough period (in most cases at least – see Taking holiday on assessing whether a furloughed worker can take holiday). However, to do so they must be paid the correct holiday pay.

If you have any questions on holiday entitlement or furlough, please do not hesitate to give us a call on 0208 249 6007. Consultation is always free of charge.


Written by Irina Stucere

Filed under  Blog • Business Centre 

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