2nd December 2020
Holiday Pay / Early Pay
Furloughed employees continue to accrue leave as per their employment contract. You can only place employees on furlough if coronavirus (COVID-19) is affecting your operations. You should not place employees on furlough just because:
- they are going to be on paid leave
- you usually do less business over the festive period
The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below. Employees can take holiday whilst on furlough. If they are flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours. Working Time Regulations (WTR) require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks (twelve weeks in Northern Ireland). Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations. Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period. If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.
Early pay in December?
With nearly 6 million people now in receipt of Universal Credit and with 38% of them working, please remember the December RTI easement for any employers who are paying earlier than the normal contractual payment date this month.
The ‘payment date’ in field 43 must be left as the normal contractual payment date (or over written if your software changes it to actual payment date). So if employees are normally paid on the 25th December and you’re going to be paying them, for example, on the 18th, the payment date must remain as the 25th.
The December easement also permits you to file the FPS on, or before, the contractual payment date rather than on, or before, the actual payment date which is the normal rule.
If the payment date field is brought forward to the earlier actual date of payment there is a risk that the Universal Credit recipient will end up with two amounts of earnings in one award period which could cause them serious financial problems. HMRC did recently send out an email alert to remind employers of the easement, but this may not have reached all the people that need to know and if this is included in the December Employer Bulletin it will probably be too late for many employers as it was when it was first announced in December 2018.
For full GOV.UK guidance – Follow this link