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Global: Annual leave in the time of COVID-19

Integrated Wellbeing|Health and Benefits|Total Rewards
COVID 19 Coronavirus

July 31, 2020

Denmark and the U.K. have passed legislation to address issues affecting employee annual leave entitlements caused by COVID-19.

Employer Action Code: Monitor

Employees in many Northern Hemisphere countries normally use much or all of their annual leave in July and August; however, in 2020 normal practice on annual leave has been upended by the COVID-19 pandemic. When normal business operations were temporarily suspended, some employees were required to use their annual leave. Others were able to continue working remotely or were deemed essential, potentially inhibiting their ability to take their leave. For some workers, it may be a challenge to use their full legal entitlements before the end of the year. Recent pulse surveys in Ireland and the Netherlands found that nearly half of the companies surveyed are struggling with their vacation policies as a result of COVID-19. Two countries, Denmark and the United Kingdom, have passed legislation in response to these issues.

Key details

United Kingdom

  • New amendments to the Working Time Regulations allow employees to carry forward up to four weeks (20 working days) of their statutory annual leave entitlement of 28 days, including bank (public) holidays, for up to two leave years if it is not “reasonably practicable” for employees to take some or all of their holiday entitlement due to COVID-19. Normally, unused statutory annual leave cannot be carried forward to the next leave year except for reasons of illness and maternity leave. The remaining 1.6 weeks of leave (eight working days) can be carried forward one leave year by written agreement, subject to the same expectation that carry forward should occur only if it not reasonably practicable for all or some of the leave to be used up. Payment in lieu of statutory annual leave is not permitted except on termination of employment. These provisions apply only to statutory leave. Treatment of annual leave in excess of statutory requirements is subject to company or collectively agreed rules.

Denmark

  • Amendments to the Holiday Act allow employers to agree to (or to unilaterally) postpone using annual leave entitlements to the next holiday year (which are truncated by 2019 amendments to the act). Thus, statutory annual leave for employees unable to use up their leave entitlements for the 2019/20 leave year, which ended on April 30, 2020, could be carried forward to the shortened holiday year of May 1 to August 31, 2020. If it is again not possible for the leave to be used within that time frame, unused leave can be carried forward to the leave year running from September 1, 2020, to December 31, 2021. The employer must compensate employees for any financial losses related to the postponement of leave. The measure generally applies to all employees but should be based on readily evident strains on operations that are outside management’s control. Employers are otherwise expected to accommodate the use of annual leave as normal.

Employer implications

To date, governments have focused on measures that allow employers to require staff to use their annual leave; however, depending on the course of the pandemic, its economic impact, the length of leave entitlements and rules on carry forward, the issue of unused leave may become more pressing, particularly where there are no statutory provisions for carry forward of unused leave (e.g., Brazil) or where carry forward is generally limited to the first three months of the following calendar year (e.g., Luxembourg).

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