Rolled up Holiday Pay
by Liam
The EAT has handed down an interesting judgmenton the subject of rolled up holiday pay. Although the DTI, or BERR to use their new name, say rolled up holiday pay is unlawful (based on a case in the ECJ last year - see http://www.dti.gov.uk/employment/employment-legislation/working-time-regs/rolled-up/page29030.html) the EAT have held that if rolled up holiday pay is paid (which it recognises it shouldn’t be), the amount paid can be offset against any other holiday pay that may be due so the rolled up holiday pay could completely extinguish any right to holiday pay at the time holiday is taken.
It should be noted that rolled up holiday pay can only be offset against other entitlements where there is a mutual agreement for ”genuine payment for holidays representing a true addition to the contractual rate of pay for time worked.” In other words, there must be evidence of a transparent agreement whereby the employee receives an addition to his basic pay for each period worked - for example, £X per hour plus £Y holiday pay or £X per hour of which Y% is holiday pay. It will not be sufficient to take basic pay and say that it includes an element of holiday pay - the holiday pay must be extra.
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