Stuart Gentle Publisher at Onrec

Employment tribunal rules that holiday pay doesn’t accrue on furlough

An Employment Tribunal has ruled that a contract for services worker did not accrue holiday while on furlough, a significant move that provides much needed clarity for UK recruitment agencies.

The case, Mr D Perkins v The Best Connection Group Limited (TBCGL), 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 and therefore didn’t accrue annual leave during that time.

Analysis of the claimant’s contract with TBCGL also highlighted that the agreement only existed when he was on assignment, specifically 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 judge also ruled that the claimant was unable to work for TBCGL while on furlough and therefore couldn’t claim to be on assignment.

This aligns with the government’s guidance on holiday pay and furlough, advice which the Recruitment & Employment Confederation lobbied extensively for at the beginning of the COVID-19 pandemic.

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.”

Barring any further extensions, the CJRS is set to run until the end of September and it’s likely further claims will be raised in the coming months. Agencies requiring further clarity regarding any furlough holiday pay disputes or uncertainty can contact the REC for expert advice and support.