Employers are legally obliged to grant their staff four weeks’ paid holiday. But insisting on giving them rolled up pay, including a non-specified sum in lieu of holiday pay, is now likely to be illegal.
Guidance from the Employment Appeal Tribunal (covering England and Wales) means that organisations can only operate in this way if holiday pay is clearly identified in the contract and a genuine addition to the agreed rate of pay. In Scotland, a landmark legal ruling makes the practice of rolling up illegal altogether.
Controversial case law on holiday pay, putting into practice the newly-extended European Working Time Regulations, has indicated tighter rules on holidays and how they are paid. It can be a baffling field for employers, but help is on hand from an authoritative legal handbook just published by the Chartered Institute of Personnel and Development.
Working Time Regulations, the latest in the Legal Essentials series from employment law experts Sue Nickson and Judith Firth, of leading legal firm Hammonds, is an easily-referenced, clearly-written and essential aid for managers and HR professionals, comprehensively covering how the legislation should be put into practice.
Updated in a second edition, the book offers help on every aspect of the regulations, which were extended in August to include new groups of workers. It begins, for example, with how to define a worker, which may include people whom companies would prefer to regard as self-employed.
Sectors that were previously excluded from the regulations - such as railway workers, some other transport workers and junior doctors - have now been brought within their ambit. The handbook explains who is covered, how workers can opt out of the 48-hour maximum working week, which trades and professions are exempted, who qualifies as a night worker, and how daily and weekly rest periods should be applied.
Nickson said that legal rulings to clarify the position on holiday pay, including the effect of time off sick and a legal decision on whether it should be based on working days or calendar days, would have widespread repercussions. This is a big issue, as some employers prefer to pay holiday pay each month in an employee’s salary.
Most office workers are now covered by the regulations. In the UK, it is estimated that 120,000 people will be affected by the ruling on daily and weekly rest periods; 20,000 will benefit from the time limits for night workers; 50,000 will benefit from the paid leave entitlements; 160,000 will come within the 48-hour limit on the working week; and 210,000 night workers will have the right to have health assessments.
Nickson and Firth also predict that the regulations will become tougher in future, and the opt-out provision more restricted - if not abolished altogether. The ability to opt-out is being reviewed and we’re waiting to hear whether it will continue or not. Nickson said.
New CIPD book warns of traps in holiday pay
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