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MILs HR UpdateBack

MILSLogo2Holiday pay and irregular workers

“I have a lot of workers, particularly drivers but also some MOT testers, who work very irregular hours for me, on an ‘as and when’ basis.  Some days and weeks they can be in regularly but weeks can go by when I don’t need them.  They are happy with this arrangement and so am I. 

One worker has now come to me claiming that I should have allowed him holiday and I now must pay him holiday pay?  He works so irregularly for me that I considered he had plenty of holiday between the assignments of work, am I wrong?”

The simple answer is yes.  In employment law not only ‘employees’ but also ‘workers’ (a broader category than employees) are entitled to statutory minimum holiday under the Working Time Regulations.

In the UK this essentially means all full-time workers/employees should be receiving the 20 + 8 days leave over the course of the year.  If workers are part-time then you should pro-rata holiday entitlement.

The difficulty in the above situation obviously comes with calculating the holiday pay where the hours are very irregular, and also the simple fact that many employers and workers aren’t aware of the statutory right to holiday pay for all workers.

These practical problems have led over the years to some employers instituting a process of “rolled up” holiday pay. This involves paying extra each month in lieu of entitlement rather than actually giving holiday. Technically in law since 2006 the European Court of Justice has ruled that is contrary to the Working Time Directive however many employers still employ the system, as there is further commentary that provided the holiday pay is a genuine calculation and is transparent and is a genuine addition to the worker’s rate then, although workers could bring a claim, that would have effectively have already been settled by the payment of the rolled-up holiday pay.  There are risks for employers however as this area of law is not entirely settled so there remains a risk that by doing so employers could in the future be challenged and have to pay additional sums on top of what they thought they were already paying for holiday pay.  In commercial reality however the practice still continues and many employers and workers find it mutually beneficial.

If you don’t want to give rolled-up holiday pay then ACAS publishes guidance on how you should be trying to calculate holiday pay for workers with very irregular hours. It remains the case that employers should be trying to calculate and grant holiday to all workers, however difficult this can be in reality.

Henry Knill, Head of Employment, Motor Industry Legal Services

Posted by Leana Kell on 12/02/2016