These questions are being answered by Learn HR, a market leader in the provision of HR and payroll training and nationally-recognised professional qualifications.
Q: We employ a lot of casuals and pay them holiday pay as part of their weekly wage. Is this legal? We are getting conflicting advice.
A: Certainly this is the most convenient way for you to pay their holiday pay as it saves you having to make frequent and complex calculations. However the practice is in the legal melting pot and that is why you will be receiving conflicting advice.
One senior court has judged that it fails to meet the purpose of the Working Time Directive which is to provide employees with pay when they take leave in order to pay for their holiday. If it is rolled up in wages they will have nothing extra for their holidays and therefore will be discouraged from taking them.
Another senior court has said that the practice is acceptable provided that the amount is properly calculated and expressed clearly on every wage slip. I would put my money on the first argument winning eventually. I’m sorry, but you will have to choose whether to play safe and discontinue the practice, calculating the pay each time an employee takes holiday, or continue and risk falling foul of the law.
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