Following the news that the furlough scheme is to be extended until October, we’ve put together a guide covering some key issues relating to holiday pay, bank holidays and notice pay.

Holiday pay

Employees who have been placed on furlough continue to accrue statutory holiday entitlement and any additional holiday (bank holidays) provided under their employment contract.  An employee has the same holiday entitlement regardless of whether they are on sick leave, maternity leave or furlough.

Employees on furlough can take holiday without disrupting their furlough.  You, as the employer, should engage with your employees and explain to them reasons for wanting them to take holiday before asking them to do so.

If you need further advice on this please contact your HR advisors or we are more than happy to introduce you to our HR advisors for support on any HR matters.

Bank Holidays

Where a bank holiday falls inside an employee’s period of furlough and the employee would have usually worked the bank holiday, their furlough will be unaffected by the bank holiday.

However, if the employee would usually have had the bank holiday as leave, there are 2 options you as the employer can take:

  1. The bank holiday is taken as annual leave.  If you and your employee agree that the bank holiday can be taken as annual leave while on furlough, you must pay the correct bank holiday pay for the employee.   You as the employer can ask your employees to take the bank holiday as leave with the correct notice periods.
  2. The bank holiday is deferred.  If you and the employee agree that the bank holiday will not be taken as leave at this time, the employee must still receive the bank holiday, the bank  holiday can be deferred till a later date.

The HMRC legislation is clear that if you are paying your employees their holiday pay this will be paid on the employees contractual daily rate.

Notice pay

It is permissible to give employees notice whilst on furlough. However it is advisable that the employee should be paid their contractual salary whilst on the notice period.  If you are considering giving an employee notice please seek HR advice.