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Rolled-up holiday pay

22nd December 2005
Page 34
Page 34, 22nd December 2005 — Rolled-up holiday pay
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Which of the following most accurately describes the problem?

Holiday pay is described as 'rolled up when a portion of holiday pay is added to the worker's hourly rate of pay and paid as part of their wage for working time. When the worker takes holiday no extra payment is made. This practice is seen by many employers as more convenient than making holiday payments as and when leave is taken, especially if the workforce is transient or operates or a shift system.

Next year, the European Court of Justice (ECJ) is expected to rule on whether this type of arrangement is lawful. In the meantime, the Advocate General, whose job is to help the ECJ reach its decision, has stated that rolledup holiday pay agreements are problematic because they are likely to put pressure on some workers not to take holiday. This is because workers with rolled-up holiday pay can usually earn more money by not taking holiday. Some could struggle to budget for time off work if holiday pay is received little by little, sometimes well in advance of the planned holiday date.

The Advocate General believes that, for rolled-up holiday pay to be valid, measures to alleviate these pressures must be in place.

Employers might be forced to make sure workers take holiday or that they get holiday pay when leave is taken. Any agreement must be transparent so workers know how much of their wage represents holiday pay.

The Advocate General's opinion is not legally binding. But if the ECJ adopts a similar approach and it does tend to follow the Advocate General's lead -the practical difficulties of making sure workers are not put off taking leave may mean that rolled-up holiday pay agreements no longer represent the convenient option for many employers.

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Organisations: European Court of Justice

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