Cloudy outlook for holiday pay

by John d'Arcy

Two new industrial court rulings have added to confusion over whether employers may legitimately avoid making separate holiday payments under the Working Time Regulations by including a special holiday pay element as part of a weekly or hourly 'rolled-up rate'.

George Brumwell, general secretary of UCATT, has hailed what he described as a "landmark holiday pay victory" at the Edinburgh Employment Appeal Tribunal (EAT). In this instance, the appeal court upheld a previous employment tribunal decision that MPB Structure acted improperly in including holiday pay as part of a rolled-up rate paid to UCATT member Alexander Munro.

The original tribunal held that a provision in the relevant contract of employment, whereby an allowance of 8% was made in each weekly pay packet to provide for holiday pay, was void.

MPB subsequently went to appeal. Turning this down, the EAT concluded: "We consider that the only way the provisions of the regulations and, indeed, their spirit can be met is for holiday pay to be paid as and when the holiday is taken at the appropriate rate."

Brumwell commented: "It's time the industry faced up to its responsibilities and stopped wasting the tribunal's and union's time. This EAT decision sends a clear message to employers that all workers are entitled to holidays with pay, regardless of their status."

At the same time, a London central employment tribunal has just published its unanimous decision in a case involving brickwork contractor Frank Staddon. Here it dismissed a claim for holiday pay by another UCATT member on the grounds that he knowingly accepted an employment contract under which holiday pay was included in a rolled-up daily rate.

The tribunal concluded that there was thus no breach of the Working Time Regulations. On behalf of Staddon, it was argued that a London EAT last November had already accepted the legitimacy of a rolled-up rate (this was the 'Gridquest case' involving engineering workers supplied to Ford Motor Company).

Brumwell said that his union is taking the Edinburgh decision as a benchmark. He said the findings relating to Frank Staddon will be taken to appeal.