Holiday Pay Changes – Will You Be Better Off?

The government has launched a consultation to establish how holiday should be calculated for temporary workers in the wake of last year’s Harpur Trust v Brazel case.  This ruling established that holiday entitlement should not be pro-rated down any further than 1 year, i.e. all workers should receive 5.6 weeks paid holiday annually, no matter whether that worker is full-time, part-time or seasonal. 

The case was published in July 2022 and doesn’t actually change the law itself, it just clarifies how legislation should be interpreted.  Although nonsensical, it means that part-year workers are entitled to a larger holiday entitlement than part-time workers who work the same total number of hours!  The government is keen to address this disparity and ensure that everyone’s  holiday pay is proportionate to the time they spend working.

The consultation proposes simply adding 12.07% on to a worker’s pay rate in order to take account of the holiday accrued for every hour worked.  Historically, this method of calculating holiday was the industry norm for the recruitment sector, and despite the Harpur Trust case it is still widely used – as there isn’t a sensible alternative.

So the proposal for the 12.07% calculation to be formally accepted is very welcome indeed!  Bringing in these changes will simplify holiday pay for employers and make it much easier for temps to work out how much they’re entitled to and – crucially – claim it.  As it stands, many temps don’t even realise they’re entitled to holiday pay.  It means tens, potentially even hundreds of millions of pounds, are going unclaimed every year.

The government must go further, though.  It’s surprising that the consultation doesn’t explore the issue of rolled-up holiday pay, which is when a temp receives holiday pay as part of their wages rather than being paid when they take time off.  This method is perceived as unlawful because it contradicts the purpose of working time regulations which is being paid whilst taking a break. However, rolled-up holiday pay does ensure that temps receive their entitlement, and giving people an informed choice is what’s important here.  Temps are precarious enough and already risk losing holiday to unscrupulous companies, so they must be empowered to ensure that they do actually receive it.  


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