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Holiday Pay |
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Under the Working Time Regulations (WTR) workers have the right to four weeks paid leave per annum. Some employers have sought to get round the regulations by giving 'rolled up' holiday pay. This means that part of the worker's regular pay is deemed to be holiday pay. In an important decision in (Marshalls Clay v Caulfield) the EAT has just clarified when rolled up holiday can be paid. Considering a series of scenarios the EAT held:
1.Contracts which are simply silent as to holiday pay are contrary to the WTR;
2.Contracts which purport to exclude liability for holiday pay are contrary to the WTR;
3.Contracts where rates are said to include an amount for holiday pay, but there is no indication of the specific amount are again contrary to the WTR;
4.Contracts giving a basic wage or rate topped up by a specific sum or percentage in respect of holiday pay are however lawful;
5.Contracts where holiday pay is allocated to and paid during (or immediately before or after) specific periods of holiday are again lawful.
The EAT also provided useful guidance on how to pay rolled up holiday pay:
1.The rolled-up holiday pay must be clearly incorporated into the individual contract of employment, and be expressly agreed.
2.The allocation of the percentage or amount to holiday pay must be clearly identified in the contract, and preferably also on the payslip.
3.It must amount to a true addition to the contractual rate of pay.
4.Records of holidays taken must be kept.
5.Reasonably practicable steps must be taken to require workers to take their holidays before the expiry of the relevant holiday year.
(with thanks to barrister Daniel Barnett for news of this decision)
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