“Sensible” move will ensure flexible workers receive holiday pay they are entitled to
The government has confirmed that it will make rolled-up holiday pay lawful. Announced last week (Wednesday 8th November) in a consultation response, the move offers flexible workers an earnings boost that could be worth thousands of pounds each year.
Making rolled-up holiday pay lawful means that “irregular-hours workers and part-year workers” will receive their holiday pay as an “enhancement” on top of every payslip, instead of when taking annual leave.
As well as putting more money directly into worker’s pockets, experts say the reform will make it much harder for unscrupulous umbrella companies to skim holiday pay – providing greater protections to the UK’s flexible workers.
Rolled-up holiday pay has been unlawful since a 2006 ruling at the European Court of Justice. This does not mean it has been illegal, however.
The government’s consultation response acknowledges that “rolled-up holiday pay is already used in a lot of sectors due to the simplicity it offers to calculate holiday pay for irregular hours workers”. As such, making rolled-up holiday pay lawful will formalise its use.
Businesses will also benefit from planned changes
Alongside the benefits for workers, rolled-up holiday pay offers advantages for businesses too. As a simplified method of calculating holiday pay for any staff working irregular hours, rolled-up holiday pay reduces the administrative burden that small businesses face.
Making rolled-up holiday pay lawful is just one part of a package of changes. The other measures concern record-keeping requirements under the Working Time Regulations and consultation requirements under the TUPE (Transfer of Undertakings (Protection of Employment)) regulations.
The National Chair of the Federation of Small Businesses (FSB), Martin McTague, said the measures were “sensible changes” which would offer “clarity for employers” without comprising on worker entitlements and protections.
“We’re eager to see a system that’s clear-cut, cost-effective and easy for small businesses to roll out, so these announcements are a crucial step forward”, McTague said.
Speaking about the package of measures, Kevin Hollinrake – a government minister of the Department for Business and Trade – said the reforms would “ensure our employment regulations are fit for purpose while maintaining our strong record on workers’ rights”.
“Huge news” for flexible workers
Julia Kermode, CEO of PayePass, welcomed the move to make rolled-up holiday pay lawful, describing it as “huge news” for the UK’s temporary workers.
“By allowing rolled-up holiday pay, the UK’s growing number of temps and irregular-hour workers will receive what’s legally theirs – which could be worth thousands for every worker”, she said.
The reform means workers are “guaranteed to receive” their holiday pay – something which is not currently the case.
Some flexible workers are unaware they are entitled to holiday pay at all, and others have holiday pay “unfairly withheld” by unscrupulous employers.
The legal changes mean “there are no excuses” and temporary workers should receive what they are legally entitled to. Making rolled-up holiday pay lawful will stop “dodgy businesses from deliberately withholding [holiday pay] from their workers”.
While it is as yet unclear when the change will be made effective, Kermode believes the upcoming Autumn Statement offers an opportunity for the government to “set a date in stone”.