"Rolled-up" holiday pay
Are you being paid in accordance with current legislation?
"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 ECJ (European Court of Justice) decided that the practice is 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.
As your fulltime employer, we are therefore under obligation by law to pay you for any holidays taken, a percentage is deducted from the gross that we receive from the client and paid to you when you take holiday.
If no holiday is taken during your term of employment then any accrued holiday pay is paid to you on termination of said employment or following the end of the leave year, whichever is sooner.
The percentage we deduct rose from 8.33% to 10.17% on the 1st October 2007 when the government ruled that employees are now entitled to 24 days paid leave per annum. This will increase again to 12.07% in April 2009 when the statutory paid holiday entitlement is increased by a further 4 days making 28 days in total.
Details of any accrued holiday pay are included at the time we e-mail you a copy of your pay advice.
Here are some links that you may find of interest:
BERR Department for Business, Enterprise and Regulatory Reform (Formerly DTI)