A friend is currently being paid 6.96 per hour and has just been informed that this includes holiday pay. Their basic is 6.50 and the .46 is in lieu of holidays. They have a zero hours contract.

I believe that this “rolled up” type of pay is actually unlawful and if this is the case who should they report the matter to?

Thanks

I think it’s permissible if certain rules are followed re payment and reporting/accounting.

I believe it used to be more common place, which is why it’s still lurking in the odd contract.

Tell your friend to speak to their employer first. If no luck try CAB

EDIT: I’ve just noticed that the UK minimum wage is £6.50. If the employer has set out clearly that the £6.50 is their normal pay and the other element is for holidays then i can’t see the problem.

It’s not an unlawful practice. Question is whether he was told at the start or not. Has he got his contract?

https://www.gov.uk/holiday-entitlement-rights/holiday-pay-the-basics

And page 9 of this suggests it is unlawful.

http://www.lra.org.uk/information_note_3_-_holidays_and_holiday_pay_november_2012.pdf

Other documents often state the employer “must not” and “cannot” use rolled up pay.

But if they do can anything be done about it?

Yep, as above my understanding is it’s not allowed.

I’d refer to CAB in the first instance.

Also – even if it was allowed, I can’t see how a calculation would give 0.46p per hour as the correct amount anyway.

Statutory holiday pay is for 5.6 weeks/year (i.e. this is the minimum allowed). Regardless of how many hours worked per week, the minimum hourly rate if it’s rolled-up like that would be £6.50 x 52 (weeks in a year which you have to be paid for) / 46.4 (weeks you actually work allowing for 5.6 weeks’ holiday) = £7.28 and a bit.

But that’s irrelevant anyway as it’s not allowed. They have to pay holiday pay when he/she is actually on holiday – based on the average of the last 12 weeks’ pay (so they can’t say that you’re on a zero-hours contract, get you to work 40 hours a week and pay you for a lesser number of hours during holiday either).

IANAL (but am an employer who tries to play fair!)

Perhaps there’s a way employers are getting around it. What does your mate want from this? Again, it probably comes down to his contract which he must have read and agreed.

Thanks drover!

This only came to light as they are leaving at the end of this month and enquired about accrued holiday pay – only to be told they didnt have any!

Edit: he isnt looking anything really but if an employer is in the wrong surely some action needs to be taken.

Again, it probably comes down to his contract which he must have read and agreed.

Don’t the terms of a contract have to be legal for it to be legally binding?

IANAL (AOAP)

If he’s not had any paid holiday then he’s entitled to 5.6 weeks’ pay divided by whatever proportion of the holiday year he’s been there. Plus backdated to last year if he’s been there longer than one (holiday) year. If the start/end of a holiday year is not specified in his contract then it defaults to when he started employment. This could add up to quite a bit of money.

If the contract states something unlawful, that bit of it can be ignored.

It’s never nice for an employer when employees “work to rule” and make life difficult (I imagine, thankfully we’ve never really faced this!) and life is not easy for small businesses who employ others and create jobs… but it’s completely out of order for an employer to screw their staff out of their minimum legal entitlements in this way. It’s not fair on the employee, it’s not fair on other taxpayers (as there’d be tax due on that holiday pay which would help the exchequer a little bit) and it’s not fair on other small businesses who do play fair, and end up at a competitive disadvantage (though perhaps having motivated staff, who feel appreciated and work harder as a result might make up for this….). So I’d say go after them for every penny!

/rant

HMRC enforce minimum wage regulations. I expect they will do sweet FA about it though due to staffing problems.
A big plus one to Drover.