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| Working time and holiday pay |  |
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Conflicting results have arisen from applications to ETs, on the one hand indicating that inclusive payments are not legal, and on the other hand indicating they are. To the rescue comes the Court of Appeal, which has indicated that if the parties agree that pay includes holiday pay then it can be held to be a valid arrangement. The lesson from this is that you should not include payment for holidays within the normal pay rate unless you have the worker’s express agreement, or you want to run the risk of a claim.
However, this particular sea is murkier than first appears. A recent decision makes it clear that if you overpay an amount in respect of holidays you cannot recover the overpayment by deduction from future payments unless the worker consents.
In addition, a worker appears to be entitled to payment for any leave not taken in the leave year. This is despite the fact that the WTR states that a worker cannot carry leave not taken in one year over to the following year, and payments “in lieu” are not allowed except upon termination of the contract. This last decision appear to mean that a worker could work for 52 weeks of the year and still be entitled to a further 4 weeks holiday pay. In my book, this amounts to payment in lieu and counters the spirit of the Regulations by discouraging workers from taking holidays! It has also been decided that in certain circumstances a worker can claim sums due for years gone by, assuming an application is made within 3 months of the end of the last leave year.
Furthermore, it was recently held that a worker on long term sick leave is still entitled to paid holidays even though the worker was not entitled to contractual pay whilst sick! As if that is not enough, the EU’s recent complaint to the UK that it has failed to implement the Working Time Directive correctly, including in relation to holidays, means there are likely to be more regulations to come. As in Ireland, those regulations will probably include an obligation upon the employer to require the worker to take holidays – an impossible task?
Keep your hatches battened down and get your contracts right.
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Disclaimer- This article is for general guidance only and is not a substitute for professional advice where specific circumstances can be considered. Whereas the greatest of care is taken in providing this information, neither the author nor Lawspeed can accept any liability for any action taken or not taken in reliance upon the information provided in this article.
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