'Rolled-Up' Holiday Pay
The Umbrella Company tells me that holiday pay is included in each payroll, is this right?
Simply put, the answer is "NO" Rolled-up holiday pay (RHP) refers to the practice of an 'employer' agreeing with workers that their pay for annual leave is included in their hourly remuneration and paid as part of their remuneration for working time but not paid in respect of a specific period of leave actually taken.
There was conflicting authority on the legality of this practice. Numerous challenges had been brought at employment tribunals, and the Scottish and English courts had each taken a different approach. Previously, the EAT in Marshalls Clay (now Hansen Clay) v Caulfield had held that such arrangements were lawful, provided they were incorporated into a binding contract and were sufficiently transparent to identify the amount paid in respect of holiday. However, the Scottish Court of Session ruled that such arrangements are unlawful in the case of MPB Structures Limited v Munro.
Following such cases, the European Courts decided that the practice was not lawful under the Working Time Directive and holiday pay must be paid in respect of a specific period during which the worker actually takes leave.
Topics relating to RHP or Rolled Up Holiday Pay can be found here:
- Direct GOV (the source for all official UK government Information) http://www.direct.gov.uk/en/Employment/Employees/Timeoffandholidays/DG_10034711
- BIS (formerly DTI - Department of trade and Industry) http://www.berr.gov.uk/whatwedo/employment/working-time-regs/case-law/index.html
- Download the ACAS leaflet on holiday pay here
ACAS Council provides up to date information and advice to Employers and Employees.
The Umbrella Company is your fulltime employer, therefore they are under obligation by law to pay you for any holidays at the time holiday is taken. A percentage is usually deducted from the gross payment that is to be processed and paid to you when you take your leave.
The amount an Umbrella Company would be expected to deduct in order to calculate an employees statutory paid holiday entitlement is based on a percentage of 12.07% of the gross contractor income.
