Managing employee holiday entitlement in 2021

As home schooling draws to an end and Spring is in sight, many employees are still to take any leave in 2021 and nor are they likely to want to until there is somewhere to go on days off and going on holiday is no longer illegal. This means there is a wave of untaken holiday building up in many organisations. In some cases, this is further topped up by holiday carried over from 2020.

Employers are left with the dilemma of how to manage the remaining leave in a fair way that will not impact on operations and meeting client needs later in the year.

In this article we look at the main issues and options available to employers.

Basic human rights

The purpose of annual leave is to give workers a period of rest in order to protect their health and wellbeing. Every employee has entitlement to 5.6 weeks statutory leave each year. From this the first 4 weeks should be taken by the employee and cannot be carried forward into another holiday year. The remaining 1.6 weeks can be carried forward into the next holiday year as long as there is an agreement in place between the employee and employers.

Pay out of holiday

If an employee does not take all of their 5.6 statutory leave entitlement in the holiday year, there is no right for the untaken days to be paid out to the employee. The purpose of leave entitlement is for it to be taken so the employee gets an adequate period of rest. This is why it cannot be paid out and why employers are obligated to give their employees the opportunity to take all of their leave entitlement.

There are two exceptions to note:

1. Where an employee leaves employment in which case they are entitled to payment of any accrued but untaken leave
2. Where holiday entitlement offered by the employer is more than the statutory minimum of 5.6 weeks. For example, if an employer offers 6.6 weeks leave but the employee only takes 5.6 weeks of leave, the balance of 1 week can be paid out so long as there is a mutual agreement between each individual employee and the organisation.

Carry forward rule change

Due to Covid-19, there was a temporary change to the rules on the carrying forward of leave.

The government allowed for up to 4 weeks of holiday accrued in 2020 (or the 2020/21 holiday year for organisations not following the calendar year for leave) to be carried forward and taken during the subsequent two holiday years.

Stipulating minimum holiday amounts across the year

Employers have the option to ask employees to take a certain amount of leave by a set date, such as stipulating a minimum number of days to be taken per quarter during 2021. This is a method to avoid employees ending up in December with most of their leave still remaining.

Forcing employees to take leave

Employers do have the option to enforce periods of leave. This can be done by issuing notice of the dates to be taken off that is twice the amount of the time that the employee is required to take off. For example, if you need an employee to take 1 week off, you would give the employee 2 weeks’ notice (or if you want the employee to take 2 days off you give 4 days’ notice).

This is not dissimilar to announcing a Christmas shutdown and stipulating the number of days to be taken from each employee’s holiday allowance.

Before utilising this method, employers need to consider the negative impact on employee engagement such a step might have. However, for employees on furlough this may be a realistic option as it reduces the impact on an organisation once the furloughed staff return to work as they will have less holiday left to take.

Foreign holidays

The decision whether to risk a foreign holiday to a country not on the government’s exempt list during annual leave will often rest on whether an employee is willing to self-isolate without sick pay when they return. Employees are not entitled to statutory sick pay if they are self-isolating because they have returned to the UK. Where an employee cannot work from home, they have the option of requesting either:

• Further annual leave to cover their absence
• Requesting unpaid absence

The key is to communicate to employees that if they choose to go abroad in 2021, they face risks when they return. Then the employee can make informed decisions on what they can afford to do.

Source: Gavin Parrott