Recent government proposals indicate an intention to make changes to the holiday pay regime including bringing back rolled up holiday pay.
Rolled up holiday pay is the name given to the arrangement whereby an individual receives an element of holiday pay with every payment they receive for work performed, rather than receiving payment at the point holiday is taken by the worker. This is common in short term, ad hoc and casual arrangements, including where individuals work through recruitment companies and umbrellas. However, its use has always been somewhat of a grey area because, although being judged to be impermissible under the current holiday rules, employers could, in certain circumstances, set off rolled up payments against statutory entitlement.
Details of precisely how this will now be addressed in UK law, the conditions that will be required, and when this will apply from, have yet to be released. However, the current consultation covering the general principle suggests that the changes may follow existing caselaw. This requires that, if payment on this basis is to be allowed, it should be dealt with in a genuine, transparent, and comprehensible manner in relevant documentation including the contract and pay slips. It is therefore essential if considering rolled up holiday pay as an option, that all appropriate steps are taken to achieve this standard.
For more information on holiday pay, including rolled up holiday pay and current proposals, join us for our Live webinar on Thursday 22nd June at 11am.
If you are unable to make the live webinar, a recording of the session will be available shortly after.
We have a whole series of webinars available surrounding the important and complex compliance areas within the recruitment industry. These have been broken down into comprehensive and informative sessions which also look at key areas of risk, the dos and the don’ts in each case, with a view to helping you secure your balance sheet.
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Theresa Mimnagh, Director, Lawspeed
Lawspeed group corporate clients benefit from immediate up to date advice on staff engagement and related regulation; employment status; client, IR35, PAYE and umbrella contract templates; contract review/negotiation; self-employment and CIS contract templates; trade membership and government representation; accreditation services and a state of the art digital contract management platform.