UK says rolled up holiday pay is allowed under WTD

Faced with conflicting rulings by the High Courts in England and Scotland, the UK government has admitted that rolled up holiday pay is permissible and does not necessarily contravene the intentions of the European Working Time Directive.

The government argues that the Directive allows a degree of flexibility in the way it is implemented by national legislation and that it does not prescribe the timing or method of payment for holidays.

The government position is set out in a submission by the Treasury to the European Court of Justice. The court has been asked to reach a definitive legal judgment on whether holiday money due under the Directive may be paid as part of an inclusive or rolled up hourly rate.

At the same time, the Republic of Ireland has tabled a submission that agrees with the decision of the Scottish High Court that rolled up holiday is not permissible.

The Irish State Solicitor noted that “under Irish law, an employee must be paid for annual leave immediately in advance of the taking of leave. An employer may not therefore pay annual leave throughout the year in instalments or at any time other than immediately prior to the taking of the leave period.”

A third formal submission to the court has come from the European Commission. Given that the Directive was introduced as a health and safety measure, the Commission said the primary point is to ensure workers take holidays.

The issue of rolled up pay was referred to the European Court of Justice in the wake of high profile cases involving MPB Structures in Scotland and Marshalls Clay Products and Frank Staddon in England.

A final decision, for which no date has been set, could open the floodgate to holiday pay claims worth hundreds of thousands of pounds.