All agency temporary staff and talent contracts should now be reviewed following a key decision on holiday pay and basic remuneration. Osborne Clarke’s employment law guru Victoria Parry investigates.
Topic: Working Time Regulations
Who: Marshalls Clay Products Ltd v. Caulfield (& others)
Where: Employment Appeals Tribunal UK
When: July 2003
What happened
You can 'Roll-up' holiday pay and not necessarily breach the Working Time Regulations!
Previous case law on the subject of rolling-up holiday pay has left us all confused. The Scottish case of Munro initially said that rolled-up holiday pay was void under the Working Time Regulations. Then the case of Gridquest held that an employer cannot unilaterally decide that workers' hourly rate includes payment for the day's work together with an amount of holiday pay.
Importantly for us though, in Marshalls Clay, the problem was addressed head-on. The Employment Appeals Tribunal held that contracts providing for a basic wage or rate topped up by a specific sum or percentage in respect of holiday pay does not contravene the Working Time Regulations.
Future guidance:
From this case, we now have some useful practical guidance for dealing with these situations in the future:
· Rolled-up holiday pay must be expressly agreed in the contract of employment;
· The amount of holiday pay must be clearly identified in the contract, and preferably also in the payslip;
· It must amount to a true addition to the contractual rate of pay;
· Records of holidays taken must be kept; and
Reasonably practicable steps must be taken to require the works to take their holidays before the expiry of the relevant holiday year.
Why this matters:
In relation to holiday pay, the Working Time Regulations try to ensure that all workers get proper paid holidays and they do not sacrifice their holidays in an attempt to earn more money. In the television, advertising and film industries, it has been common for a rolled-up provision to appear in engagement contracts.
However, with the recent state of the case law being in such turmoil, it has not been possible to say with any certainty, whether or not this provision complies with the Working Time Regulations. Now, following Marshalls Clay, we have some comfort when using these provisions, that as long as we expressly agree and incorporate the term into our contracts, it will be effective.
Of course, we must still be aware that we have the conflicting decision in Munro, and we can only now wait to see whether this new decision will be overturned or appealed, or whether the issue has been settled for good.
