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The rolled-up holiday pay

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  1. The question of the compatibility of the regime of 'rolled-up holiday pay' to the working time directive.
    1. The regime of 'rolled-up holiday pay'.
    2. The facts in the two cases.
  2. The refusal of the ECJ to validate the regime of 'rolled-up' holiday pay.
    1. Payment for annual leave included in hourly or daily remuneration contrary to the working time directive.
    2. Consequences of that decision.
  3. Conclusion.

The Working Time Regulations (?WTR?) were introduced in the UK in 1998 to implement the EU Working Time Directive 93/104/EC (?the Directive?) and are intended to be a health and safety measure. Under the Regulations, workers are entitled to four weeks paid annual leave. One of the most controversial questions with regard to the right to receive four weeks paid annual leave under the Working Time Regulations is whether and in what precise circumstances, ?rolled up? holiday pay arrangements are permissible. This is a system whereby employers pay an additional amount representing holiday pay into the normal salary/wages paid to workers. When the worker then takes annual leave, he does not receive any pay. The worker receives this enhanced hourly rate (typically, this is represented by an 8 to 9% addition to hourly or daily remuneration) to compensate for the fact that he will not be paid holiday pay when annual leave is actually taken.

[...] The holiday pay must be additional to any remuneration in respect of work done and should be paid during the specific period of leave. Concerning payments already maid to workers through the system of ?rolled- up holiday the Court decided that payments made transparently and comprehensibly, may be set off against the payment for specific leave. Nevertheless set-off is excluded where there is no transparency or comprehensibly. The burden of proof is on the employer to prove the transparency of the payment. [...]


[...] He was then on holiday until July and went back to work with the company but he was not paid between June and July because his contracts stipulated that: Holiday and Bank Holiday pay is included within the daily rate.? Mr Clarke made a claim for the payment of the annual leave, which he had accrued during the period from April to November 2001. The Employment Tribunal dismissed that application and Mr Clarke appealed against that decision to the Employment Appeal Tribunal. [...]


[...] According to the ECJ's decision, the basic guidelines are that: Ideally employers should make payments for holiday during the actual period when the worker takes his annual leave An employer paying rolled-up holiday pay should ensure that it is clear that payments include an additional payment for holiday pay and what that additional payment is. In addition, employers must ensure that workers receive the same amount of pay this way as they would do were payment to be made in respect of specific holiday taken. [...]

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