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The bin men of Hammersmith & Fulham are unhappy. Many of them have worked for months without taking time off. They’ve also had to keep the service running while colleagues have fallen sick with COVID-19 or have had to self-isolate. However, their employer, SERCO, has told them that they will not be able to carry over unused leave after 31st March. The GMB union has now got involved, arguing that this contravenes a government directive that has seen employees carrying over annual leave for an additional two years.

Unless the dispute is resolved, Hammersmith & Fulham’s bin men may well go on strike. Hopefully this will be avoided – the last thing anyone wants is rubbish piling up on the streets. That said, the case does raise some important questions. If you are an employer, are you aware that there are pandemic-related rules about carrying over annual leave? And if so, are you certain that you are applying them correctly?

What are the rules about carrying over annual leave?

The government announced new regulations that affect annual leave back in March 2020. In a press release, it said:

“The regulations will allow up to 4 weeks of unused leave to be carried into the next 2 leave years, easing the requirements on business to ensure that workers take statutory amount of annual leave in any one year.

“This will mean staff can continue working in the national effort against the coronavirus without losing out on annual leave entitlement.”

As always, though, the devil is in the detail. A closer look at the regulations soon reveals that there are conditions attached to whether an employee defers leave. Similarly, there are circumstances in which an employer can refuse to let an employee carry over their time off.

Let’s take a closer look.

Holiday entitlement

Nearly all workers have the legal entitlement to 5.6 weeks of paid, annual leave. Many of these are on contracts that give them additional paid holiday. Holiday entitlement applies whether someone is working, on sick leave or maternity, parental or adoption leave. A person can request leave while they are on sick leave, but you cannot make them take holidays whilst ill. If an employee contracts the coronavirus, you cannot require them to take their sick leave as holiday.

Furloughed workers can also take holiday. If they do, you must pay them what they would normally earn – i.e. 100% of wages, rather than the 80% of wages covered by the government grant. However, because the employee remains on furlough (albeit while on holiday), you can still claim the government grant and top the wages up to full pay.

Carrying over annual leave

Normally, the statutory 5.6 weeks of holiday is split into two periods of 4 weeks and 1.6 weeks.

The 1.6 weeks can normally be carried forward into the next leave year if there’s a written agreement between employer and employee. The remaining 4 weeks cannot usually be carried forward (exceptions include when a worker can’t take leave due to maternity leave or sickness).

The Working Time (Coronavirus)(Amendment) Regulations 2020 have changed this. In essence, if it’s ‘not reasonably practicable for a worker to take leave as a result of the coronavirus’, they may carry over annual leave into the following two leave years.

What does ‘not reasonably practicable’ mean? 

There are various circumstances that can make it not reasonably practicable for workers to take their leave as normal. These might include:

  • The business is experiencing a major increase in demand because of COVID-19 that reasonably requires the employee to be at work.
  • Practical problems providing temporary cover for the employee because of coronavirus-related issues – including the ability of the remaining workforce to provide cover
  • An employee’s leave having an impact on ‘society’s response to, and recovery from, the coronavirus situation’.

That said, as an employer, you should also take into account:

  • The worker’s health and their need for a period of rest
  • The length of time a worker has remaining in their leave year.

Given all these factors, employers should still do all they can to make sure workers can take their leave in the correct year. When carrying over annual leave, employers should ideally give employees the chance to take it as soon as it is practical.

What about furloughed workers? 

Most furloughed workers won’t need to carry forward annual leave. One exception may be when an employer can’t afford to top up holiday pay beyond the 80% government grant. This would likely make taking leave ‘not reasonably practicable’. Even so, you must give workers the opportunity to take their leave before they lose it at the end of the next two leave years.

What else do I need to consider? 

There are various other factors you need to take into account. For example, if someone leaves your employment, you still need to pay them for any untaken leave – including leave carried forward. There are also rules relating to agency workers. If in doubt, we strongly recommend you seek advice from an employment specialist.

If you are a THP client and need advice on how annual leave affects your payroll, please get in touch.

Need further advice on any of the topics being discussed? Get in touch and see how we can help.

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About Samantha Rowe

Sam’s title is Operations Manager, but the title itself doesn’t truly convey the variety of what she does for THP.  From administrative tasks to payroll, strategic business planning, and office systems and procedures, Sam’s primary skill lies in multitasking.

Sam’s journey began as an office junior with George Nottage (now merged with THP), and she soon learned skills in payroll and bookkeeping, and then gained experience as a PA to the Directors, and as Administration Manager.

At the moment, Auto Enrolment is an area that has a key focus for Sam, and for THP as a whole.  “The question I’m asked the most by clients just now is, ‘How will auto enrolment affect me?’ And the answer is, no matter how big or small you are, you will absolutely be affected by the Auto Enrolment regulations. I’d encourage you to start thinking about it now, and to look at your payroll software to make sure you’re ready.”

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