One of the employment side-effects of coronavirus has been a change to the rules governing the carrying forward of annual leave. In certain circumstances, a worker can carry forward up to 4 weeks holiday entitlement into the next two leave years. However, as always, the devil is in the detail; to understand the permissible circumstances, it is first necessary to recap the Working Time Regulations 1998 (WTR).
Regulations 13 and 13A of the WTR provide that workers are entitled to 4 and 1.6 weeks’ annual leave respectively in each leave year – a total of 5.6 weeks or 28 days for a regular full-time worker. The 4 weeks under regulation 13 of the WTR is referred to as the ‘basic entitlement’ and derive from the EU Working Time Directive while the further 1.6 weeks under regulation 13A, referred to as the ‘additional entitlement’, reflect our usual domestic public holidays (although, despite the allowance for these, a worker is not statutorily entitled to take annual leave on a bank or public holiday as their employer can require them to work on such occasions where there is an express or implied term in their contract).
Generally, the 4 weeks basic entitlement cannot be carried forward from one leave year to the next unless the worker is prevented from taking it because of sickness absence or maternity leave. Despite being the subject of much case law in recent years, for the time being this appears to the settled position – our domestic courts have recognised that the prohibition on carrying forward leave in regulation 13(9) of the WTR must be interpreted in accordance with EU law. Regarding the additional entitlement, on the other hand, it has always been the case that this can be carried over where there is a relevant agreement, for example a contract of employment or collectively agreed terms.
It is worth remembering that the leave year concerned will be the dates agreed between the parties or, in the absence of a relevant agreement, the 12-month period beginning on the worker’s start date and each anniversary (for employment commencing after 1 October 1998) or 1 October to 30 September (for employment commencing on or before 1 October 1998). The leave year can therefore differ between employers (and between employees) and need not align with the calendar year.
Employers must ensure that workers have an opportunity to take paid holiday while annual leave cannot be replaced with a payment in lieu except on termination of employment. It is also established that the fundamental purpose of holiday is ‘rest, relaxation and leisure’. This presented a problem earlier in the year when it was recognised that lockdowns and the pandemic might mean workers being unable to take annual leave due to industry demands or not benefitting from holiday during lockdown or periods when travel restrictions are in place. In response, government introduced the Working Time (Coronavirus) (Amendment) Regulations 2020 (WT(A)R).
The WT(A)R provide that where in any leave year it was not reasonably practicable for a worker to take some or all of the leave to which they were entitled under regulation 13 of the WTR as a result of the effects of coronavirus, that leave can be carried forward and taken in the next two years.
The first thing to note is that the WT(A)R only applies to the basic entitlement (4 weeks) – it does not apply to the additional entitlement (1.6 weeks) or any further entitlement conferred on the worker by their employer. Whether or not such leave can be carried forward will, in most cases, be determined by the contract.
The second thing to note us that the WT(A)R does not apply to any basic entitlement which despite ‘the effects of coronavirus’ it was ‘reasonably practicable’ for the work to take.
The effects of coronavirus are not limited to the effects on the worker directly (for example, because they contracted the virus) or indirectly (for example, because they require time off work to care for a family member who has), they include the effects of coronavirus on the employer, the wider economy and society – a spectrum so wide it make the definition almost impossible not to fulfil. Reasonable practicability will therefore determine whether a worker is entitled to carry forward basic entitlement to annual leave under the WT(A)R, so under what circumstances might it have been ‘not reasonably practicable’ for a worker to take their basic entitlement in the leave year concerned?
Not all practical difficulties in taking leave caused by coronavirus will fail the test – the cancellation of an overseas holidays and lockdown (or strict restrictions) generally are unlikely to mean that it was not reasonably practicable for a worker to take leave, similarly furlough without any other factors. However, workers, particularly those in key industries, who were unable to take holidays because of an enduring requirement to work, such as a depleted workforce or increased demand, are more likely to be able to argue this. Personal circumstances will also be relevant – someone living alone might argue that the requirement to self-isolate prevents them from genuinely benefiting from the fundamental purpose of holiday; it may risk discrimination to reject a carry-over request from a worker who is disabled under the Equality Act 2010 and argues that they were prevented from taking leave because of their disability.
The government’s guidance sets out various factors which employers should consider when applying the not reasonably practicable test – https://bit.ly/39L82Iz. Acas has suggested the following circumstances where a worker may be able to carry over annual leave relying on the WT(A)R:
- Where the worker is self-isolating or too sick to take the holiday before the end of their leave year;
- Where the worker has had to continue working and could not take paid holiday; and
- Where the worker has been furloughed and could not reasonably use holiday in their leave year.
Where some or all of a worker’s basic entitlement to annual leave is carried forward to the next leave year under the WT(A)R, it will be fairer to allow the worker to take their holiday entitlement which expires first in the new leave year as the carried-over leave can be taken within the two leave years, although employers may need to review and consider amending their contractual arrangements with workers where these prescribe an order in which holiday must be used that conflicts.
In relation to when the carried-over leave is taken, regulation 15 of the WTR, which provides that an employer may require a worker to take, or not take, statutory annual leave on certain days (so long as they give at least twice as many days’ notice of the period of leave as its duration, other than where a relevant agreement provides for shorter notice) is modified by the WT(A)R to prevent the employer objecting to a request to take carried-forward leave other than where it ‘has good reason to do so’. This has yet to be tested, however, where it is reasonably practicable for a worker to take leave their employer should permit this. It remains that case that employers and workers should try to ensure that holiday is taken in the leave year to which it relates.
For more information on carrying over holidays, please contact Matthew Rowlinson on:- E: mrowlinson@jacksons-law.com | T: 0191 206 9617, or another member of the Employment Team.
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