Around 8.9 million employees were put on furlough this year, and whilst on furlough, they accrued annual leave which has gone unused due to the Coronavirus pandemic. For employers, this is a liability nightmare. 
With December marking the end of the holiday year for many companies, employers face a massive problem of how to deal with their annual leave liability, especially as annual leave cannot be paid in lieu - except for termination of employment. 
To start, you need to calculate how much accrued holiday your employees have for the remainder of the year and how much this liability will cost them. There are then several options available to reduce this liability. 
Carry-over Holiday 
In March, the Government passed an amendment to the Working Time Regulations (WTR), in response to the Coronavirus pandemic; which allows employees to carry over up to 4 weeks of accrued annual leave on the grounds they’ve been unable to use it due to pandemic. 
As a solution, you could speak to your employees about carrying over their annual leave and how they propose to use it. To help manage your liability and implement a plan to reduce it, you could stipulate that the employee must use ‘X’ amount of days by 31st March 2021. 
This approach balances the business needs with the employee’s needs and avoids the ‘use it or lose it’ approach, which can leave companies open to disputes. 
Annual Leave and Furlough 
The ‘furlough scheme’ was recently extended from the 1st November to 31st March 2021 (the Government plans to review this scheme in the New Year) to support employers and employees over the Winter months. 
Furloughed employees are entitled to take holiday whilst on furlough, and to receive full pay for the holiday period taken, in accordance with the WTR. As an employer, you also have the option of forcing your employees to take holiday whilst they’re on furlough, as long you give them notice which must be twice the length of time you require them to take holiday. 
This solution prevents employees from accruing too much annual leave and taking it in large chunks at a later date. 
Christmas Holidays 
As the Government announces the lifting of lockdown and the mixing of households for Christmas, many employees will want to make the most of the festive period after a tough year and use some of their accrued holiday. Assuming this fits in with your business plan, this is an excellent way to reduce your liability. 
Some companies will find it easy to implement set holiday dates, and some already operate mini-shutdowns (part of their company policy) over the Christmas period. In regards to the latter, if an employee is already furloughed, you can force them to take holiday whilst the company shuts down for Christmas. However, you cannot put an employee on furlough to cover the holiday period. 
There will be companies whose busiest period is December and who’ll want to capitalise on the festive period after a bad year. In this situation, it’s essential to ensure your business is staffed efficiently. To reduce the risk of unhappy employees or worse disputes; it’s vital that you tell your employees that they cannot make holiday requests over specific dates and to discuss alternative holiday options. 
Mental Health 
The wellbeing of your employees is crucial. Many employees will have worked above and beyond to ensure the success of your business over the past year, combined with their own fears over job security. Ensuring your employees take their allocated holiday is vital for their mental health. 
In turn, caring for your employee’s mental health will reduce sicks days, retain talent and develop a more productive workforce. 
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