Does holiday accrue for agency workers on furlough?

No, says the recruitment and employment law specialist Lawspeed, unless the engagement contract agreed between agency and its worker normally permits holiday to accrue in between assignments.

Adrian Marlowe, director of the law firm, said “most agency workers on PAYE contracts provide that the worker is only paid whilst working and in particular is not a ‘worker’ as such when not on assignment, namely supplied to a hirer. As such once an assignment is ended any entitlement to worker rights, such as accrual of holiday entitlement, cease altogether.

“Furloughing under the government job retention scheme does not change that position. By definition the agency worker is not working when furloughed even if the intention is that the assignment may resume in due course. This is the factual position. Accordingly unless the contract allows for temporary lay off with payment and continuing rights in the interim, agency workers have no entitlement to accrue holiday or to receive holiday pay. Government guidance states that the legal position under the engagement contract is the defining position.

“Accordingly care must be taken when furloughing not to change a ‘no rights in between assignment’ position under the contract. The cost and risk of mistakenly varying terms could include payment of an extra 12.07% on top of the furlough payment, exposure to worker rights claims and a misunderstanding of the legal position that may deter the agency from taking up the furlough option in the first place.

“An agreement to furlough an agency worker is always needed however. This should ideally be separate and avoid varying the original agency contract given that payment under the furlough scheme is entirely different from payment for work done.”

For more information or advice on furlough contract arrangements email