Legal | Will furloughed staff receive bank holiday pay?

Will furloughed staff receive bank holiday pay?

As Brits get ready to down tools for another bank holiday weekend, many workers on furlough will be wondering how their pay will be affected.

In response to Prime Minister Boris Johnson’s lockdown measures, which saw thousands of businesses temporarily close, Chancellor of the Exchequer, Rishi Sunak, unveiled the Coronavirus Job Retention Scheme (CJRS).

Under this scheme, the Government will pay up to 80% of furloughed staff wages which can be up to £2,500 per month.

Acas stated that employers can top up the pay of furloughed workers to 100% though this is not compulsory.

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Yet, for furloughed workers to be eligible for this grant, they aren’t able to undertake any work for, or on behalf of their employer.

According to Acas, employees or workers who have been furloughed in response to the pandemic can request and take annual leave in the usual way, if their employer agrees. This applies to bank holidays too.

The public body stated that furloughed staff members must receive their pay in full for any holidays that they take.

Holiday pay for furloughed staff

While has been a grey area surrounding the treatment of holidays and bank holidays for furloughed staff, Rustom Tata, Partner & Chairman at law firm DMH Stallard told HR Grapevine that “we now have clarification that holidays can be taken during a period of furlough, and that an employer can require (subject to requisite notice being given) an employee to take a period of holiday during furlough.”

Although there isn’t an automatic entitlement to take leave on a bank holiday, Tata explained that it is the norm for most employees.

“Where an employee is entitled to take a bank holiday as part of their annual leave entitlement, then just as with other holiday the employer must pay them for the bank holiday at their normal rate. This will be at 100% of salary, but it may also need to include certain other elements such as overtime and bonuses and commission. This is consistent with the recent case law in this area.

“Having to recalculate the amount of pay will cause many employers considerable additional work when claiming under the furlough scheme. Some may consider that they would prefer to allow the employee who is on furlough to carry forward the day’s leave, and that is an option specifically identified in the latest Government guidance,” he added.

'Technical questions of bank holidays'

Lee Nair, Managing Associate at law firm Lewis Silkin explained that bank holidays “throw up technical legal questions” in normal circumstances, let alone during a pandemic where some workers have been furloughed.

She explained: “Employees can take holiday while on furlough. They should be paid their usual holiday pay rate for the 28 days of statutory minimum holiday we have in the UK – not reduced furlough pay.

“The key question is whether bank holidays during furlough count as holidays.

“There is no statutory right to take bank holidays off unless the employment contract provides for this – usually saying ’20 days plus 8 bank holidays’. The minimum 28 days of statutory holiday could be met using non-bank holiday days."

Nair added that if employees would usually work on a bank holiday “then, unless the employer makes an exception and requires them to take it as holiday, they will be on furlough leave – not holiday – on the bank holiday because it is just a normal working day for them. That means furlough pay applies.

“However, where the employment contract provides for the employee to take bank holidays off as holidays, then, unless the employer and employee agree to defer the holiday to another date, they will be on holiday – not furlough leave – on the bank holiday. That means holiday pay applies,” she told HR Grapevine.

Holiday pay

When it comes to determining holiday pay, Nair explained that the monetary amount will depend on several factors.

“There are complex rules about how employers should calculate holiday pay for the 28 days of statutory minimum holiday. However, any additional holidays can be paid at whatever rate is agreed between the employer and employee, which could be lower,” Nair added.

While most business will be concerned by costs at the moment, Nair said that employers should be mindful of the importance of holidays for employee wellbeing and productivity.

Chancellor extends UK furlough scheme

The Government’s CJRS currently supports an estimated 7.5million with 8,000 firms taking upon the offer to support employees.

Last week, Sunak revealed to parliament that the furlough scheme will be extended until the end of October 2020.

Though new adaptions will see the scheme become more flexible.

For example, as of July, the burden of salaries will be shared between the Government and employers and from August employers will be able to bring staff back part-time

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