The government has amended the Working Time Regulations 1998 (WTR) to allow workers who have not taken all of their WTD annual leave entitlement (4 weeks/20 days exclusive of bank holidays) due to the COVID-19 pandemic to be able to carry it over into the next two leave years.
The current position regarding holiday entitlement
Under the WTR, workers are entitled to 5.6 weeks’ paid annual leave per year (pro-rated for part time employees). This is made up of 4 weeks required under the European Working Time Directive (WTD Leave), and an additional 1.6 weeks permitted under WTR (WTR Leave). Some employees are entitled to more holiday under their contracts of employment (contractual leave).
The WTR provides that workers must use their 4 weeks’ WTD Leave entitlement in the leave year in which it is due, otherwise the entitlement will be lost. The 1.6 weeks’ WTR Leave can be carried forward into the next leave year if this is provided for in an employment contract or the employer’s holiday policy. This is subject to exceptions in relation to maternity and sickness cases.
When does this take effect?
The Working Time (Coronavirus) (Amendment) Regulations 2020 (SI 2020/365) came into effect on 26 March 2020.
Who is covered by these new rules?
The WTR apply to almost all workers including agency workers, hourly-paid workers and those on zero-hours contracts.
What does it mean for employers?
This means that the carry-over of any untaken WTD leave is permitted where it was not reasonably practicable to take it in the leave year “as a result of the effects of the coronavirus (including on the worker, the employer or the wider economy or society)”.
Carried-over leave may be taken in the two leave years immediately following the leave year in respect of which it was due.
Can employers refuse leave to be taken on particular days?
Employers continue to have the right to refuse permission for a worker to take leave on particular days (provided they give notice which is at least as long as the holiday requested). However, under the new regulations, employers will only be able to require a worker not to take carried-over leave on particular days where they have a “good reason” to do so; this is undefined.
What about if the worker’s employment or engagement is terminated during the two-year period?
The new regulations also provide that a worker must be paid in lieu of any untaken carried-over holiday where their employment or engagement is terminated before they have had a chance to take it. So, if a worker’s employment or engagement is terminated during the two-year period, any payment in lieu of holiday must include a payment in lieu of holiday carried over under these provisions.
Is there anything else that employers need to consider?
As the full 5.6 weeks’ WTR Leave (and any enhanced contractual leave) cannot be carried over, employers will need to determine how to designate any leave that has already been taken, and any leave not carried over and taken during the current leave year, to calculate how much leave an employee can carry over.
Designating any leave already taken as WTD Leave rather than as counting towards the 1.6 weeks’ WTR leave or contractual leave could result in employees losing that leave.
Although employers can now spread out the employee’s annual leave that has accumulated during this current annual leave year over a further two year period, employers should still consider how they will manage all their employees having additional annual leave to take in the next two leave years. Under the WTR, employers are able to give workers notice directing them to take their statutory holiday on specified dates, provided such notice is twice the length of the period of leave the worker is being directed to take. Employers may want to consider exercising this right to manage the additional annual leave carried over.
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