The rolled-up holiday pay

Résumé du document

The Working Time Regulations ("WTR") were introduced in the UK in 1998 to implement the EU Working Time Directive 93/104/EC ("the Directive") and are intended to be a health and safety measure. Under the Regulations, workers are entitled to four weeks paid annual leave. One of the most controversial questions with regard to the right to receive four weeks paid annual leave under the Working Time Regulations is whether and in what precise circumstances, "rolled up" holiday pay arrangements are permissible. This is a system whereby employers pay an additional amount representing holiday pay into the normal salary/wages paid to workers. When the worker then takes annual leave, he does not receive any pay. The worker receives this enhanced hourly rate (typically, this is represented by an 8 to 9% addition to hourly or daily remuneration) to compensate for the fact that he will not be paid holiday pay when annual leave is actually taken.

Extraits

[...] Consequently the Court decided that payment for minimum annual leave through a system of “rolled-up holiday is contrary to the Working Time directive. This payment should be made in respect of a specific period during which the worker actually takes leave. The holiday pay must be additional to any remuneration in respect of work done and should be paid during the specific period of leave. Concerning payments already maid to workers through the system of “rolled- up holiday the Court decided that payments made transparently and comprehensibly, may be set off against the payment for specific leave. [...]

[...] The refusal of the ECJ to validate the regime of “rolled-up” holiday pay Payment for annual leave included in hourly or daily remuneration is contrary to the working time directive Firstly the Court recalls that the entitlement of every worker to paid annual leave is an important principle of Community social law from which there can be no derogation. The aim of holiday pay is to enable the worker to lake leave to which he is entitled. Then the ECJ ruled that payments for annual leave must be additional to payments for work done. Payments for minimum annual leave cannot be made in the form of part payments staggered over the period of work and paid together with normal pay. Such an arrangement is unlawful. [...]

[...] The facts in the two cases In these cases there were two references for a preliminary ruling concerning the interpretation of Article 7 of Council Directive 93/104/EC of 23 November 1993. This directive concerns certain aspects of the organisation of working time. These references were made concerning the payment for annual leave in the case of an inclusion of the remuneration for that leave in the hourly remuneration. So these references were about the regime known as “rolled-up holiday pay”. [...]

[...] When the worker then takes annual leave, he does not receive any pay. The worker receives this enhanced hourly rate (typically, this is represented by an 8 to addition to hourly or daily remuneration) to compensate for the fact that he will not be paid holiday pay when annual leave is actually taken. Payment for annual leave is therefore made in the form of part payments staggered throughout the year and the employers argued that it was the duty of the recipient to put the (extra) money aside for their statutory holiday periods. [...]

[...] Can the employers safely continue to pay rolled-up holiday pay? If sums paid as rolled-up holiday pay can still be set off against any compensation in a claim about the practice after the ECJ judgment, then some employers may consider that it is worth continuing to take the risk of paying rolled-up holiday pay since any compensation awarded to employees who claim is likely to be low; so there will be no incentive to bring claims. Even with this approach risks remains. [...]