Many employers in the motor industry are facing a headache post lockdown with managing employees’ holiday entitlement.

In this article, we thought we would bullet point some of the key considerations and potential options.

The key points to remember for an employer are as follows:

  1. In the UK, entitlement to annual leave is split into different sections of leave:
  • 20 days known as “EU” leave which derive from the Working Time Directive;
  • an additional 8 days “UK” leave.

Together, the 28 days is the minimum in UK law, but as below, different rights attach to the different sections.

Anything beyond 28 days is extra contractual leave and again, different rules would apply.

  1. Except on termination of employment, employers are not supposed to pay in lieu of any untaken holiday.
  1. Employers should be facilitating employees to take all their leave within the holiday year, but if an employer does so and the employee does not take the leave, then (subject to certain exceptions) the employer can determine that any unused leave entitlement is lost at the renewal of the new holiday year.

As holiday will have continued to accrue during any period of furlough and lockdown, many employers are finding it difficult to grant employees their full leave entitlement within the holiday year.

What are the options in these circumstances?

  • One option is to try to “buy” some of the leave back from the employee. As above, with the statutory minimum leave, this is not technically allowed in law, albeit commercially, it is something that employers and employees might agree if both parties are willing to do so.
  • Where the Coronavirus has rendered it not “reasonably practicable” for employees to take their leave during the holiday year, then new regulations allow workers to carry over untaken holiday into the next two leave years (SI 2020/365). The two-year carry-over applies to the 20 days basic EU leave.

This is a relatively limited right and guidance suggests that it only relates to situations where it will be quite difficult for the employee to take their statutory leave, given the extent of the leave year remaining and the extent of the holiday entitlement remaining. Further guidance is available at:

  • Under the Working Time Regulations, it is possible for the employer and employee to agree to carry over the additional UK leave (effectively the 8 days of the 28) into the next leave year if there is agreement.
  • With any contractual leave above and beyond the 28 days, employers and employees have more leeway. As above, there is nothing to prevent the employer and employee agreeing a payment in lieu of the extra contractual holiday, if that makes it more manageable. In the alternative, if the employer can demonstrate a strong business case, it might, after consultation, decide that it needs to change the contract and reduce contractual leave in the present economic circumstances.

As the above summary demonstrates, the situation is somewhat complicated, and you should always seek specific legal advice which will depend on the individual facts of the case.

If you find yourself in a similar situation with managing employees’ holiday post lockdown, you should seek advice via the RMIF helpline.

Motor Industry Legal Services

Motor Industry Legal Services (MILS Legal Ltd) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.