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Holiday pay doesn’t accrue on furlough, rules ET

7 Jul 2021

    • A contract-for-services worker did not accrue holiday while on furlough, an Employment Tribunal has ruled, a finding that provides much-needed clarity around holiday pay and furlough.

    The judge in Mr D Perkins v. The Best Connection Group Limited (TBC) found that for the period that the claimant was on furlough, he was not a worker for the purposes of the Working Time Regulations 1998 (under which employees are entitled to paid leave) and therefore didn’t accrue annual leave during that time.

    The judge also found that the claimant’s contract only applied while he was on assignment, stating that he would not “receive payment from TBC or its clients for any time not spent on assignment whether in respect of holidays, illness or absence for any other reason”. The claimant was not on assignment while on furlough and therefore could not claim payment.

    The Government has produced guidance on holiday pay and furlough, following lobbying from the Recruitment and Employment Confederation (REC).

    Lorraine Laryea, Director of Recruitment Standards and Compliance at the REC, said:

    “One of the major issues for recruiters in 2020 as they considered whether to engage with the new Coronavirus Job Retention Scheme (CJRS) to furlough temporary workers, was whether holiday and holiday pay would accrue for those workers who were placed on furlough.

    “The REC lobbied the Government extensively to release guidance on exactly this, which resulted in advice being published in May 2020. However, this isn’t statutory guidance and it’s important to bear in mind that the judgment is a first instance decision, meaning that other Employment Tribunals presented with similar cases could reach a different decision. However, the analysis in this case, which draws out the specific nature of temporary workers on contracts for services and the interaction with the holiday pay legislation and furlough provisions, is compelling and in the view of the REC, more accurately reflects how the law should apply in these types of claims.”

    The CJRS is set to run until the end of September and further claims may be raised in the coming months.