News & Insights

COVID-19: New annual leave regulations

New regulations in force to relax carry-over of untaken annual leave due to the outbreak of COVID-19.

New rules allowing for the carry-over of annual leave have been made and brought into force immediately due to the significant disruption caused by COVID-19.  The Working Time (Coronavirus) (Amendment) Regulations 2020 amend the Working Time Regulations 1998 (WTR) to lessen the restrictions on how much accrued but untaken leave can be carried over by employees where it has not been reasonably practicable for them to take some or all of their leave due to COVID-19. The government has now published guidance on the interpretation of these regulations during the pandemic.

The amended regulations allow for the four weeks annual leave provided for by Regulation 13 WTR to be carried forward into the following two years where it has not been reasonably practicable for the worker to take some or all of it due to the effects of coronavirus. The additional 1.6 weeks of annual leave provided for by Regulation 13A are not impacted by this new law and can currently be carried over for up to a year by agreement at any rate. When determining whether it is reasonably practicable for an employee to take holiday an employer should consider various factors such as possible increases in demand due to the coronavirus, disruption to the business’s workforce and the impact the worker taking leave may have on society’s overall ability to recover from pandemic. The Government has included a number of examples in the guidance to help employers understand what would be considered reasonably practicable.

Providing they give suitable notice and act reasonably, employers can require workers to take holiday and cancel existing holiday dates. These rules also apply to furloughed workers who can be required to take holiday however employers should consider whether the employee is able to properly relax and enjoy leisure time, seen as the fundamental purpose of holiday. If employers are considering requiring their employees to take holiday during a period of furlough we would recommend that they take specific advice to ensure there is no inadvertent breach of contractual or statutory obligations.

When holiday under Regulation 13 is carried forward it is subject to further protections and can only be refused where an employer has good reason for doing so. Generally it is considered good practice to allow an employee to take holiday which will expire first, in practice this would be the annual allowance, rather than the carried holiday which will not expire for two years. Carried leave is still subject to the usual rules around the payment in lieu on termination.

It is now clear that holiday can be taken without interrupting a period of furlough leave. This means that employers can continue to claim the 80% grant from the government during an employees holiday. Where holiday pay is calculated as being above this 80% the employer must pay the difference.