As a HR consultancy providing advice and support, one of the key questions that we are currently getting asked is how to manage annual leave during the Covid 19 lockdown and beyond.
We obviously hope that everything goes back to normal very soon, but in the meantime, we wanted to share our resource about how companies can best balance the need to ensure that staff have appropriate rest against the changing demands on their organisations.
Should staff still be taking annual leave?
It is advisable that staff continue to plan and take annual leave at regular intervals so that they can rest and re-energise. Employees who take regular holidays can be more motivated about their work and perform more effectively than those who do not. It’s also important for staff to take time away from work especially if they are now working from home.
From an organisational perspective, it is also important that employees have regular breaks so that there is an even distribution of staff on leave throughout the year in order to respond effectively to client needs.
What if staff want to cancel booked annual leave?
It is understandable in the current climate, where booked holidays are being cancelled and future holidays look uncertain, that employees might want to cancel planned annual leave.
While fair and sympathetic consideration should be given to these requests, you might want to advise staff that this process is not automatic, and if they want to cancel booked leave then they will need to seek agreement from their line manager and agree alternative dates when leave can be taken.
You will also need to be careful to avoid a situation where everyone has a lot of leave to take in a concentrated period later in the year, since you will need to ensure that you have adequate staffing to support and fulfil contracts/workload as they arise in future months. This is likely to be vital to ensure the future viability of your organisation.
Therefore, while requests to cancel leave should be considered, they do not automatically have to be granted. In the interests of maintaining positive staff engagement a compromise position where some leave is taken now, and some left for later in the year, is advisable.
We don’t have much work; can I insist that staff take leave?
You can. Where this is the case it is important that you are transparent and advise staff at the earliest opportunity that you may need to consider enforcing periods of annual leave.
If you choose to do this, you will need to tell staff at least twice as many days before the amount of days you need people to take. For example, if you want to close for 5 days, you should tell everyone at least 10 days before that that they will need to take a week’s leave.
However, remember that enforcing leave can impact goodwill and team morale.
It’s worth remembering leave can be managed in other ways. For example, many employers are asking employees to have taken up to 40% of their annual holiday entitlement by the end of August (where they have a January to December holiday year).
What if staff have changed their hours during the annual leave year?
Have your team voluntarily agreed to reduce their hours to help reduce costs? If so do you wish to pro rate their annual leave? If you can avoid annual leave being affected then it will help with staff retention and morale. However, if this isn’t possible, have you correctly pro-rated down their leave to match their current working hours for the period that these reduced hours are worked?
Annual leave for part time staff should be calculated as follows:
- The most accurate and simplest way is to calculate any non-standard or part time annual leave and bank holiday entitlement is to work it out in hours.
- Joe is contracted 20 hours per week; full time employees work 37.5 hours per week.
- All employees are entitled to 28 days (5.6 weeks) leave per year (pro rata for part time staff and inclusive of bank holidays)
- The entitlement for Joe would be calculated as follows:
- A full time employee (37.5 hours would have 210 hours leave per year (37.5 hours/5 = 7.5 hour a day x 28 days leave =210 hours)
- Joe, who is part time (20 hours), would receive 112 hours leave (210 hours/37.5 x 20 hours =112 hours)
- Both the full time employee (37.5 hours) and Joe (part time: 20 hours) have the same proportion of leave e.g. 210 hours (full time employee)/37.5 (contracted hours) = 5.6 weeks leave vs 112 hours (part time employee)/20 (contracted hours) = 5.6 weeks leave
- When leave is calculated in hours, an employee deducts the actual hours they would have worked on the day that they take off; this also applies to a bank holiday that would have been a normal working day but is not worked. If an employee takes an entire week off they deduct their weekly contracted hours from the total entitlement.
A lot of people find this calculation confusing so if you need any further HR resource, support or HR training UK, Avia HR Consultancy would be happy to help.
What about staff on furlough?
Furloughed workers can request and take their holiday in the usual way, if their employer agrees. This includes bank holidays. As with non-furloughed staff, an employee can insist that staff take annual leave (see further information in previous section).
However, remember that furloughed workers must get their usual pay in full, for any holiday they take. Because employers of furloughed employees only need to fund the top-up rather than the whole holiday day, encouraging (or requiring) employees to take holiday during furlough canbe a cost-effective option for employers with sufficient cashflow.
Furloughed staff will still accrue statutory annual leave as normal during a period of furlough. This is because the contract of employment continues during this period.
What about bank holidays?
Unless agreed otherwise (e.g. as a result of operational pressures; in which case a day in lieu would be given) it is reasonable to expect staff to have a have a day off on a public bank holiday.
Can staff carry over leave to the next annual leave year?
The simple answer is ‘yes’ if you agree. In an ideal world you should be aiming for all staff to take all of their leave (within the current leave period) but this may not be possible.
The important question to ask is whether you wish to offer this to employees as a benefit, or do you have no alternative but to enforce this position as the demands created by the pandemic mean that you do not have capacity to allow leave to be taken.
The law grants most workers a statutory right to 5.6 weeks’ paid holiday each year (inclusive of bank holidays and pro rata for part time staff). Holiday entitlement cannot, generally, be carried over into subsequent holiday years except in the following situations:
- Where the employer and employee agree otherwise (up to 1.6 weeks of statutory leave can be carried forward into the following year)
- Where an employee has not been able to take their statutory leave due to (usually long-term) sickness or family leave (e.g. maternity leave)
- Where an organisations offers more than the statutory minimum leave; in this situation there may be a local arrangement whereby staff are offered the the option to carry over a proportion of their additional leave (e.g. leave above the statutory minimum).
In recognition of these challenging times, new regulations came into force in March 2020 which give the option to extend the circumstances in which statutory leave can be carried over to subsequent holiday years.
The change is that a worker (with employer agreement) will be able to carry forward up to four weeks of their untaken leave, which must be taken in the two subsequent leave years.
For either the purposes of flexibility for staff, or the needs of your organisation, you may wish to consider whether you wish to allow staff to carry forward leave and if so by how much.
What actions should I now take?
- Consider your position (review your annual leave policy/process)
- Are you going to allow staff to cancel leave?
- Are you likely to be in a situation where you enforce leave being taken?
- Are you going to insist that staff take leave on a bank holiday? (this may or may not be normal procedure)
- Do you wish to ask employees to take a proportion of their leave by a set date e.g. 40% of their annual holiday entitlement by the end of August (if they have a January to December holiday year)?
- How do you wish to manage annual leave for staff on furlough?
- Have your team agreed to reduce their hours to help reduce costs? If so do you wish to pro rate their annual leave? If yes, have you correctly recalculated their leave?
- Do you wish to allow or increase the number of days that staff can carry forward into the next leave year?
- Be transparent and communicate your position
- Listen to staff concerns; keep dialogue open
- If recruitment is still taking place share these principles with new starters
- Consider how you can be flexible by balancing staff preferences with organisational demands in order to maintain positive staff engagement
- Do your managers need additional guidance/training? e.g. reminder on how to calculate/prorate annual leave for staff working less than full time hours on either a permanent or temporary basis?
- Don’t forget to say, ‘Thank You’. Use every opportunity to say ‘Thank You’ in recognition of your staff’s flexibility, commitment and professionalism during what continues to be an unprecedented and challenging period.