It’s Official – Rolled Up Holiday Pay Is Lawful

Whilst most of us have been taking a break from work and enjoying some downtime, a very positive development for temps and umbrella workers has quietly come into effect.  Regular readers will be aware that some umbrella companies and recruitment agencies wrongly withhold holiday pay from their workers in a practice which can be legal, although certainly not ethical.

One reason given to justify their immoral stance has been that “rolled-up holiday pay” is unlawful, however this excuse no longer stacks up!  The law has changed and rolled-up holiday pay is now officially recognised as a viable way to give irregular hours workers their holiday entitlement.

This means that your agency or umbrella can offer rolled-up holiday for leave years starting on or after 1 April 2024. 

What is rolled-up holiday pay?

Rolled-up holiday is simply a mechanism to receive your holiday entitlement as pay on top of your normal pay rate.  It was previously unlawful as it contradicts the underlying principle of Working Time Regulations which is that everyone should have paid time off work.  For this reason many agencies and umbrellas  accrue holiday pay on behalf of their workers, which should then be paid to workers when they take a break.

Why should rolled up holiday be allowed?

The problem with agencies and umbrellas accruing holiday for their workers is the opportunity to unfairly profit from it.  Dubious practices emerged which legally (albeit wrongly) prevented workers from receiving the holiday money that had been set aside for them.

Rolled up holiday pay prevents it being wrongly withheld from you because you receive your holiday at the same time as you receive your normal pay.  Importantly this means that you are not entitled to receive any pay when you do take holiday.

What if I don’t want rolled up holiday?

The new law does not force you to have rolled up holiday pay, it just allows it to be an option.  Your  agency or umbrella will advise on how they process your holiday entitlement, and best practice would be for you to choose whether this is rolled up (i.e. paid on top of your normal rate) or accrued (i.e. paid when you take time off).

The new legislation does not dictate that agencies and umbrellas must offer rolled-up holiday pay, but there is no reason for them not to – unless they plan to profit by withholding your money.

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