Last week (07/07/23) was the deadline for responding to the government’s consultation on legislation changes resulting from leaving the EU. Sounds dull right? Perhaps! But within this consultation was an important section on holiday pay, including a proposal to officially allow rolled up holiday pay – which had previously been deemed unlawful by the EU. This is hugely important for temporary workers as it means that your holiday can no longer be wrongfully withheld from you by unscrupulous recruitment agencies and umbrella companies.
Why is rolled up holiday pay unlawful?
Rolled-up holiday pay is where your pay rate is increased so that you receive payment for holiday at the same time as you receive normal pay – meaning that when you take time off it is unpaid because your holiday has already been ‘rolled-up’ into your pay. Because this means that your breaks are unpaid, European courts felt it is unlawful by contradicting working time regulations which require everyone to have paid time off.
So what’s the alternative?
Instead of rolling up holiday pay, recruitment agencies and umbrellas will accrue it for their temporary workers – in essence it is put to one side to be claimed when you want to take holiday. This method led to well-publicised scams where workers never received their accrued pot of holiday, usually due to spurious reasons on the part of the agency or umbrella, wrongly withholding the money as profit.
Shockingly, this practice is technically legal (depending on the specific circumstances) and it is no surprise that the legalese only came to light after dubious practices were exposed. Rolled up holiday pay being unlawful formed one part of a string of arguments drawn up by lawyers paid to justify the process and allow businesses to continue profiting from exploiting their workers.
Rolled up holiday should no longer be unlawful
So we were delighted to see the government’s formal proposal that rolled up holiday pay should not be unlawful, and our consultation response strongly supported this position. In short it would remove any rational reason for agencies and umbrellas to withhold holiday from their workers, therefore ensuring that you should always receive your rightfully earned holiday pay.
From our conversations with the government, we know that they are listening to us, and that they are keen to ensure that temps and contractors are properly considered in legislation moving forwards. So it is very likely that rolled up holiday pay will be formally acceptable in UK law, which will be brilliant news when it happens.