Facing an annual leave backlog? Employers’ questions answered

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After the government’s announcement this week that stricter coronavirus restrictions could be in place for a further six months – as the pandemic alert level was upgraded from three to four – it’s clear that employers are unlikely to be bombarded with holiday requests in the months to come.

But how should HR teams manage holiday allowance as we draw closer to the end of what for many organisation’s is their annual leave year? According to Alan Price, CEO of HR software platform Bright HR, the average number of days remaining to be booked by employees this year is 15.5, compared to 10.5 at the same time in 2019.

If staff do decide to take holiday, their chosen location could further complicate matters. It was recently reported that head teachers are seeking legal advice as to whether they can stop staff from taking foreign holidays during October half term, for fear they may need to quarantine on their return.

Technically, employers cannot tell staff what to do with their holiday, but they can urge workers to consider the impacts of that holiday when they return” – Sue Tumelty, The HR Dept

New regulations were introduced in March regarding holiday carry-over – meaning that those for whom taking holiday was “not reasonably practicable” during the pandemic – up to four weeks can be carried over for the two leave years.

A survey by price comparison site Finder.com revealed that two-thirds of employees plan to carry over some of their annual leave into the new year, taking over 5.1 days on average.

But what further challenges do employers face regarding the annual leave backlog? Personnel Today asked the experts.

What does ‘reasonably practicable’ mean in terms of employees taking holiday?

Emma Ahmed, legal director at Hill Dickinson, explains that “reasonably practicable” is a phrase used in other employment legislation and is specifically designed “to allow an employment tribunal a wide discretion to determine whether it applies or not”.

“There is an implicit expectation that employers and workers will work together to use a common-sense approach to whether or not it’s reasonably practicable for a particular worker to take holiday,” she says.

Ahmed points to Acas guidance that suggests the phrase could apply where a worker has been self-isolating or too sick to take holiday before the end of their leave year; they have been laid-off temporarily or on furlough or they have been required to continue working (such as was the case for many frontline key workers).

In its own guidance, the Department for Business, Energy and Industrial Strategy (BEIS) recommends a number of factors in deciding this, including whether the business has faced a surge in demand due to coronavirus (so the worker had to continue to work); the options available for temporary cover; whether the person’s health impacts their need for rest and relaxation; and “the impact on society’s wider response to, and recovery from, the coronavirus situation”. It insists, however, that employers should do anything they can to ensure workers take as much of their leave as is possible.

Can we force workers to take holiday?

Technically, yes, but it might not be advisable from an employee relations perspective, according to James Champness, senior associate in the employment team at Kemp Little.

“You can require an employee to take leave on fixed dates, providing you provide twice as much notice as the period of leave to be taken,” he explains. “But this might not be the best way to do it – another option is to ask employees to take a certain percentage of their leave by a certain date. You can acknowledge that they might not be able to travel in the way they might have previously, but this is one way to avoid employees ending up in December and then asking to take a month off.”

Champness adds that in certain regulated industries such as financial services, there are contractual provisions around taking periods of leave so they can spend a fixed time away from the office. There’s also the health and safety perspective for all employers. “The whole reason there are minimum amounts of annual leave is based on health and safety, so that organisations can have rested workers who have had time away from working,” he says.

Can we require employees not to go abroad?

The decision whether to risk a foreign holiday not on the government’s exempt list during annual leave will often rest on whether an employee is happy to self-isolate without sick pay when they return, according to Sue Tumelty, founder and executive director of HR consultancy The HR Dept.

“The official advice from the government is that employees are not entitled to statutory sick pay if they’re self-isolating after returning to the UK,” she explains. “This applies equally to those travelling to countries removed from the exempt list while they were there, as well those who go ahead to take holidays which have been booked since before anyone had even heard of coronavirus.”

Should there be a dispute over an employee’s holiday destination choice, any future tribunal decision “would come down to what is considered reasonable behaviour by both parties”, Tumulty adds.

“As ever, communication is key between employer and employee – policies should be in place which make it clear that, if employees choose to go abroad, they face risks when they return and can make informed decisions accordingly…

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“With no obligation for employers to pay statutory sick pay if they are under quarantine, employees can potentially face two weeks of unpaid leave before they return to work,” she says. Technically, employers cannot tell staff what to do with their holiday, but they can urge workers to consider the impacts of that holiday when they return.

Instead, she adds, “they may choose to be creative about the solutions, potentially offering the employee the chance to use holiday pay during this period instead.”

Can an employee carry over leave they would have had during furlough?

If employees take annual leave while they are on furlough, the employer must pay them for that annual leave at their normal rate of pay, rather than the reduced furlough rate. This means that where budgets are constrained, some employers may have refused requests for annual leave where they can’t afford to top up the employee’s pay.

That said, alongside key workers that may have been unable to take holiday due to work pressures at the height of the pandemic, furloughed employees are prime candidates to carry over days under the government’s amended provisions.

Workers have a right to carry up to 20 statutory days of leave into the next two leave years where it is not “reasonably practicable” for a worker to take some, or all, of the holiday to which they are entitled as a result of the pandemic. Champness adds: “Employers can still require them to take some holiday but this should be based around communications between staff and the business so that neither party feels unduly pressured.

“Employers have a legal obligation to ensure that, as a minimum, employees take at least 20 days’ leave each year (in addition to public holidays). A failure to do so can create exposure to claims for compensation and/or a declaration that employees should be permitted to take holiday.”

Can we pay in lieu for days unused?

If an employment contract provides for additional contracted holidays (above the statutory minimum), an employer and employee can agree to a payment in lieu for those not taken if they wish, says Ahmed at Hill Dickinson. However, she warns: “An employer should not unilaterally impose a payment in lieu; agreement should be sought from the employee, giving a sound business rationale to avoid breaching the employment contract.”

The whole reason there are minimum amounts of annual leave is based on health and safety, so that organisations can have rested workers who have had time away from working” – James Champness, Kemp Little

If an employee has been made redundant, the amended regulations state that any payment in lieu on their termination must include any holiday carried over for coronavirus-related reasons that remains outstanding, Ahmed adds.

Why should we encourage employees to use up their allowance?

Booking holiday when travel plans are likely to be restricted or postponed may feel like a disincentive to some employees, but it’s crucial to encourage them to take a break to boost their own wellbeing, says Brett Hill, distribution director at Towergate Health & Protection.

“It’s vital employees take a proper break to ensure they receive the recuperative benefits of taking time off work,” he says. “If breaks are just short bursts there are a number of activities which businesses can encourage staff to explore further during their time off, many of which can be supported by their employee benefits package.”

Offering benefits such as activity trackers or a health and wellbeing app may encourage staff to get outside or explore new activities, he adds, or even taking a total break from technology “can be as important as filling time during a lockdown holiday”.

“If employees want to take leave, then there are plenty of benefits available for them to try something new. Whilst some employees will still be keen to take a few weeks off, others may only want a few days – but time off remains important, even during local or national lockdowns,” says Hill.

Data from HR systems can support managers to have these conversations, says Steve Arnold of software company e-days: “If management has a clear sight of who has and who has not booked holiday, they can then communicate their concerns.

“Whether that be encouragement to take more holiday, support with individuals that find themselves managing large workloads, and even signposting people to helpful online material. A day or two every other month is useful to refocus and energise individuals and lessens the likelihood that companies will experience employee burnout.”