Annual Leave and Furlough Leave – a guide for employers and employees

During this time of covid-19 there have been so many changes in the world of work that it is understandable that so many people are finding the new legal landscape difficult to navigate.  A question that many people (both employers and employees) have been asking us frequently is “Can employees take annual leave during furlough and, if so, can employers require them to do so?”

The purpose of annual leave

The purpose of annual leave under the Working Time Regulations 1998 (“WTR”) is to allow workers a period of rest from work.  If workers are not working because they are on furlough, then the prevailing view amongst lawyers (although not the universal view) is that they cannot be required by their employers to take holiday as it will not be a period of rest from work.  Having said this, the law is not clear on this as, obviously, there have not yet been any cases on the issue and some employers are taking the risk of asking their staff to take accrued holiday during furlough in the hope that it will be deemed lawful.  Clearly if the employees agree and there is no subsequent case law on the issue, then it will not be a problem.  The worst-case scenario is that those employees will not be deemed to have taken holiday and they will then be allowed to take it on their return to work after furlough leave.  Therefore, the risk to employers is low[1].

[1] UPDATE SINCE ORIGINAL POST:  The Government has now issued its guidance on this:

The guidance states that employers can require their staff to take holiday during furlough leave but then hedges its bets by saying provided they can ensure that those employees are able to benefit from the necessary rest and relaxation.  My view remains the same – it is unlikely that the courts will find that employees can be compelled to take holiday during furlough leave.

Pre-booked holidays & bank holidays

However, the WTR does not prevent workers from taking pre-booked holiday (including bank holidays) during furlough leave (in which case the employer must top up their furlough pay to 100% of salary).  There has already been a bank holiday during furlough so if employees did not have their salary increased to 100% by their employers for that day, then they must be allowed an extra day’s holiday following the end of their period of furlough leave.

Similarly, employees who are on 80% of pay of £2500 a month during furlough may well wish to request holiday during furlough so that they can receive 100% of pay for those days.  However, the employer does not have to agree to that request and a valid reason for refusing may well be that the employer cannot afford to top up the pay.

Carrying-over leave

If employees are unable to take their full annual leave entitlement for this holiday year due to covid-19, then the recent amendment to regulation 13 of the WTR allows those workers to carry over up to four weeks’ annual leave for up to two years.  The purpose of this amendment is to try and relieve the pressure on employers who may find that, following furlough, all their employees wish to take their accrued annual leave at the same time.  Clearly this will not be practical and some employees will not be granted their requests for annual leave because they are needed in the business.


Once furlough leave has been terminated by the employer, employers may wish to dictate who takes holiday and when for the remainder of the holiday year and this is something they are entitled to do.  Provided the notice given to the employee is twice the length of the holiday the employer wishes the employee to take, the employee must take the holiday on the dates notified to her (regulation 15(4)(a) WTR).

Our thanks to Belinda Lester for this article.  Belinda is an employment law specialist and director of Lionshead Law

This article is not intended to be legal advice and should not be relied upon.

The Parental Choice Payroll team help families and small businesses with running payroll, pension administration and legal services for nannies and other employees.

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For more information on issues affecting employers as a result of the coronavirus see our coronavirus advice hub.

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