Annual leave while on furlough/rate of pay

[Twistering]

Hoping someone may have some advice...

My sister was in consultation to be made redundant (events company - foregone conclusion) before the furlough was announced. The company has since indicated they will be furloughed for as long as the scheme runs, before being made redundant. Clearly, this is helpful as extends her period with an income but they are stipulating that any accrued holiday must be taken during furlough period, at furlough rate, so it’s essentially lost as they won’t be working anyway.

Understand not continuing to accrue holiday while on furlough, but she could have used the leave by now, and therefore is losing money she would have been paid in a normal redundancy situation.

Company is not topping up furlough from the 80%. If they don’t have to pay the accrued holiday then surely they are actually benefiting from the furlough arrangement as it will cost them less to make people redundant?

All thoughts v welcome!

First thing to say is she absolutely does continue to accrue holiday during furlough. She is still employed, so she accrues holiday.

Jury is out on whether it is possible to take annual leave while on furlough. Because furlough leave isn't a 'thing' in employment law - there is no legislation or anything. It's a scheme for employers to get funding for salaries. So from an employment law point of view, then yes there's no reason an employer can't require someone to take annual leave while they are on 'furlough', as long as they give the right amount of notice (twice as long as the period of leave they want the employee to take).

however what is not at all clear is a) whether a company can claim for holiday pay as part of furlough, and b) whether HMRC will consider annual leave to be 'breaking' the three week minimum requirement for furlough, which are really basically the same question.

We just don't know the answer yet, as it's a public spending policy question, and despite multiple tweets and phone calls and queries on webinars, HMRC have not yet answered it. It's important because if they are going to say that if someone was on annual leave that doesn't 'count' as being on furlough, it will have a significant impact on furlough funding claims for lots of employers.

In terms of what pay your sister should receive while on 'holiday', there is tons of case law establishing how holiday pay should be calculated, and it's basically whatever her normal pay is. She is receiving 80% of her normal pay during furlough but there is nothing (I presume) in her agreement that suggests that she is agreeing that the new figure now is her 'normal pay' for all other purposes.

Therefore I don't think there's any reason to think paying 80% of normal pay as being holiday pay is in any way acceptable, and would be an unlawful deduction from wages in my view.

Thank you so much Flowery.... the sister in question speaking here! Really appreciate you taking the time. I see your point from an employment law standpoint that I’m still technically accruing as the furlough rolls on, but I’m less bothered about fighting that point. It’s more the holiday I could have taken in the year to date being taken away - it’s anther 700 odd quid I was due, which is very needed right now! Interesting point re the breaks in furlough though. The way it has been phrased thus far has been essentially that by accepting furlough you accept these terms - give up benefits immediately and take holiday. To me that’s just a way of making redundancy cheaper. Can they do that - say I affected furlough on those terms, if this point gets better clarified by HMRC later? Sorry for long message