Minister rejects holiday pay plea

Ian McCartney, Under Secretary of State at the Department of Trade, has turned down a fresh plea from contractors for exemption from the holiday pay requirements of the new Working Time Regulations where such pay is already covered by national bargaining arrangements.

McCartney's response came in a letter to the Engineering Construction Industry Association. It coincided with an approach from the Electrical Contractors Association spelling out how the legislation may undermine existing benefit schemes, which include a range of benefits in addition to holiday pay (see Analysis, pages 18/19).

Regulations implementing the EU Working Time Directive, which came into effect on 1 October, entitling workers to three weeks' annual paid leave at "normal" rates of pay. In practice, this means that the rate should be based on average earnings, excluding overtime, over a 12-week period prior to the holiday.

Contractors argue that this will undermine the long-established building and civil engineering (B&CE) scheme and the electrical Joint Industry Board national arrangements.

The regulations spell substantial extra holiday pay costs for contractors. For example, a building operative is entitled to a maximum holiday pay of just over £190 per week under the B&CE scheme, compared with average weekly earnings closer to £300.

The Construction Confederation says it is advising its members on top-up arrangements to the B&CE holiday pay scheme. It will be discussing longer-term amendments to the scheme with the constituent parties.