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“Rolled Up” Holiday Pay
In a previous bulletin (issue 18) September 2003 we advised that a contractual term providing for a basic wage or rate topped up by a specific sum or percentage in respect of holiday would not contravene the Working Time Regulations provided that rolled up holiday pay was “a true addition to the contractual rate of pay”.
However, in a recent Tribunal case and a separate Court of Appeal case, the issue on “rolled up” holiday pay has been referred to the ECJ and the current position in relation to” rolled up” holiday pay may be short lived.
The implications for employers are significant; not only might “rolled up” holiday pay be in breach of the Working Time Regulations but additionally another recent case shows that employees are entitled to bring claims for accrued but unused holiday pay for the year of termination by way of unlawful deduction claims. In certain cases, employees may be able to claim for unpaid holiday pay dating back to October 1998 (when the Working Time Regulations came into force).
Practical Tip
Pending the preliminary ruling from the ECJ on the issue of “rolled up” holiday pay it is prudent for employers to put in place transparent payment arrangements with short, regular intervals between payment coupled with a clear procedure for dealing with requests for and approval of annual leave. A carefully drafted holiday pay clause and procedure is essential. For further information/advice please contact lindsey.moore@brabnerscs.com
