Holiday pay for casual staff

The Working Time Regulations 1998 give every worker the right to 20 days' annual leave a year, accrued on a monthly basis, which can be inclusive of bank holidays and other public holidays (if expressly agreed with the worker).

A worker is defined as anyone who is employed under a contract, completes the work personally, and does not do so in the course of carrying on his or her own business. Only individuals such as self-employed consultants or limited liability contractors, working on their own, are likely not to be classed as workers.

The regulations do not provide for annual leave to be carried over from one leave year to the next, and an employee is required to give an employer notice requesting annual leave. An employer can also serve notice on an employee, requiring them to take annual leave.

Payment in lieu of taking holiday leave can only be made upon the termination of a worker's engagement.

expert advice

Employers must give all their workers and employees paid annual leave. There is no defence for an employer who has simply refused to pay workers or employees during holiday absences of not more than 20 days.

One arrangement for dealing with holiday pay is to give workers a top-up payment of 8.33% in addition to the basic hourly rate. Many employment businesses adopt this arrangement for their agency workers, but it has been heavily criticised and may well be deemed unlawful in the near future. Where a worker does irregular hours, holiday pay is calculated on the basis of the last 12 weeks before holiday is taken, using the worker's average earnings per day over that period.

Check list

n Review workers' terms and conditions, ensuring that the right to receive annual leave is included, and that payment for that leave period is made as and when the leave is taken.

n Set out notice provisions in a contract for a worker to take annual leave (ie, four weeks' notice of a request to take two weeks' holiday).

n Consider granting paid leave to workers who have not taken paid annual leave in the past, in lieu of that accrued untaken time.

n Also consider paying workers who took annual leave but were not paid for those periods.

n Monitor your workforce so that you are aware of anyone who has not taken their annual entitlement and consider serving notice requiring them to do so.

Beware!

The cleaner who has not been paid holiday pay as part of his basic wages could bring a claim in an employment tribunal for either a breach of the regulations or a "deduction" of wages. The term deduction has a wide meaning here and includes a unilateral decision by an employer not to grant paid annual leave, which could go back as far as 1998 if the cleaner has been employed for that long.

It makes no difference whether or not the worker has ever applied for paid annual leave. In past cases, courts have stated that workers who are not given paid annual leave as a right are likely to put up with the situation until they leave their engagement, in which case they can bring claims for non-payment.

The marketing consultant is unlikely to be entitled to annual leave, however.

Contacts

Sara Khoja

Bracher Rawlins

Tel: 020 7404 9400

E-mail: sara.khoja@bracherrawlins.co.uk

Website: www.bracherrawlins.co.uk

BOXTEXT:

The problem

A hotel employs a cleaner to work set hours a week, paying them only for hours worked and making no extra payment for annual leave. It also engages a marketing consultant, working in the hotel sector, who is paid on a commission-only basis, with no provision allowing him or her to take paid annual leave.

The problem is, are these arrangements lawful under the Working Time Regulations 1998?