Rules on carrying over annual leave relaxed because of coronavirus

New emergency regulations came into force on 26 March, which relax the normal rules on the carrying over of annual leave. Workers will now be able to carry over up to 4 weeks’ annual leave into the next two leave years if they are not able to take it because of COVID-19. The change will be particularly welcomed in sectors working nonstop in the coming weeks in the national effort against the coronavirus (for example, the health and care sector).

This temporary change only applies to the core 4 weeks of annual leave provided for in the Working Time Directive (WTD leave). It does not apply to the additional 1.6 weeks’ statutory annual leave provided for by the Working Time Regulations, nor to any extra annual leave provided for in the contract of employment.

Under the normal rules, WTD leave cannot be carried over. If it is not used in the relevant leave year, it is lost (subject to exceptions where annual leave cannot be taken because of sickness or maternity leave). In contrast, the 1.6 weeks’ additional leave may be carried forward into the next leave year by agreement.

The changes introduced by the new regulations give employers more flexibility, while protecting workers’ rights to annual leave. Untaken WTD leave can be carried over where it is not “reasonably practicable” to take it in the relevant leave year “as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society)”. Carried over leave may be taken in the following two leave years.

Employers will not be able refuse to allow a worker to take this carried over leave on particular days unless they have “good reason” to do so.  That is an additional requirement for carried over leave, in contrast to the normal position where, unless the contract of employment makes different provision, an employer can refuse to allow a worker to take leave on particular days, or direct the worker to take leave on particular days, without needing to provide a reason.

Finally, as one would expect, the new regulations provide that on the termination of employment, employers will need to pay in lieu for any leave that has been carried forward and has not been taken.

The new regulations provide welcome flexibility to deal with the problem of bunching annual leave in the run-up to the end of the holiday year for employers who are particularly busy because of the pandemic. They provide a different challenge for the many businesses that are suffering from the economic slowdown caused by the Government response to the virus: they will want their workers to take all their accrued leave while business is quiet, and may wish to direct their employees to take leave during this period. However, this is not likely to be an attractive proposition for workers while they are unable to travel or socialise, now there is an option to carry forward this leave.

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