Healy v Smart People Ltd

The employment tribunal (ET) has ruled that an agency worker was entitled to receive accrued holiday pay when furloughed.

Generally, agency worker agreements work through an agency supplying workers to an ‘end-user’ for a period of time on an assignment. The length of the assignment should be clearly specified at its commencement and agreed between the agency, the end-user and the worker. During this assignment, it is the agency that usually pays the worker’s wages.

Under the Working Time Regulations, all workers, including agency workers, are entitled to 5.6 weeks paid holiday per year. Upon commencement of work, staff begin to accrue holiday entitlement. If their employment ends, they should receive payment for any holidays they have accrued but have not taken.

In March 2020, the UK went into its first lockdown due to the coronavirus pandemic, meaning many businesses either needed to shut or saw sales significantly decrease. To offset the difficulties that would be faced by organisations in this situation, the government introduced the Job Retention (furlough) Scheme. Under this scheme, staff were placed on furlough, in which they were retained by the organisation and had part of their wages funded by the government for the time in which they could not work.

Crucially, all staff who were furloughed retained the same rights they had prior to the scheme being put into place.

FACTS

In this case, the claimant had been assigned to an end-user in February 2020 by her agency. When the first lockdown began, the end-user asked the agency to furlough all agency workers they had assigned to them, which included the claimant.

The agency worker was furloughed up until 31 July 2020, when she resigned. Upon her resignation, she was not paid for any holidays that she had accrued during this time. She later brought a claim for unlawful deduction of wages to the tribunal.

ET

At the hearing, the agency argued that it had relied on government guidance that had been available at the time. In particular, this guidance stated that agency workers may not be entitled to continue to accrue holidays whilst furloughed because ‘they are not workers or treated as workers…when between assignments or otherwise not working on assignments’. With this in mind, their argument was that the worker was not on assignment whilst she was furloughed and therefore not able to accrue holidays.

The tribunal disagreed. They found that this argument was not valid as being placed on furlough did not affect the terms of workers’ contracts, meaning that her assignment had not ended just because she was furloughed. As such, she was still accruing holidays even whilst furloughed and therefore entitled to receive her holiday pay.

Note for employers

This is yet another case stemming from the pandemic, and once again we see that it has not gone the way the organisation in question would have wanted. Although guidance on the furlough scheme has changed many times since it was first introduced, one thing that has remained pretty consistent since the start is that pre-existing rights, such as the accrual of holidays, continue when staff are furloughed.

As the scheme is wound down towards the end of September 2021, and more staff come off furlough, organisations should bear in mind that staff will have accrued holidays and may see a large number of requests to take leave. One way to work against this is to encourage staff to take some of their leave whilst on furlough, with the obvious benefit that they get paid in full for the time.

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