Will it soon be ‘cool’ to be compliant to new holiday pay standards?

Whilst there is currently little appetite to enforce holiday pay compliance, given that there is no state body championing its enforcement (other than Tribunals or Trade Union action) (1) that may be all about to change.

Under the Gangmaster’s & Labour Abuse Authority (GLAA – the non-departmental body responsible for regulating and protecting workers in the fresh produce supply chain and horticulture industry) (2), ‘labour providers are assessed to check they meet the GLAA licensing standards which cover health and safety, accommodation, pay, transport and training’ (2). According to the GLAA, ‘they check that employers are fit to hold a licence and that tax, National Insurance and VAT regulations are met’ (2).

The GLAA have recently published new licensing standards (1) – one of the most notable changes being the introduction of stricter compliance measures for holiday pay.

In order to remain GLAA compliant, as of 1st October 2018:

  • A licence holder must maintain records to show that a worker receives paid annual leave to which they are legally entitled
  • A worker must be paid any holiday pay to which they are legally entitled during the course of their engagement
  • A licence holder must give a worker payment in lieu of any accrued and unused holiday entitled, if the worker’s engagement is terminated during the course of a leave year
  • A license holder must not illegally prevent a worker taking annual leave (1)

A labour provider must have a GLAA licence to work in the regulated sectors and it is a criminal offence to supply workers without a licence or use an unlicensed labour provider (2). As compliance with the new holiday pay standards is now deemed critical, failure to comply will now see a GLAA license immediately revoked (1).

Could this be the silver bullet to realising efforts to enforce holiday pay compliance, as recommended in the Taylor Review consultations? Potentially. Aspire have gone so far to suggest that this could initiate a ‘nationwide crackdown on the incorrect administration of holiday pay to workers across all sectors’ following the Taylor Review (1), although I’m a little more sceptical. In order to see real change, I hope that the GLAA’s steps towards holiday pay compliance measures inspire other bodies and best practice employers to champion the importance of such measures to bring about effective change. I do agree though that credit is definitely due to the GLAA who, in bringing about stricter enforcement of holiday pay standards, are taking worker exploitation and mistreatment seriously in all forms (1).

In the same way that National Minimum Wage failures are about a mix of innocent non-compliance as well as exploitation, holiday pay falls in to the same camp. Many employers that I meet don’t understand that the plethora of holiday pay cases in recent years are not going to lead to new or amended legislation. All cases on the inclusion of pay elements in the 20 days EU statutory holiday, have found that the 1998 Working Time regulations can be read to include any pay element that is ‘intrinsically linked to the performance of the duties’, the principle first established in the British Airways case back in 2011. This means the following must be paid as an adjustment when a salaried worker goes on holiday:

  • Contractual overtime
  • Guaranteed overtime
  • Regular voluntary overtime
  • Commission
  • Travel allowances

No averaging period for these pay elements has been established, so it is up to the employer to establish what is appropriate and consistent, only employees with variable pay have the 12-week averaging period defined in legislation. We may though see some more definitive guidance on this soon, as BEIS have said they are committed to introducing legislation to implement the Taylor review recommendation that a 52-week average be used. Let’s hope that this legislative development also sees new guidance that puts beyond doubt all the uncertainty around holiday pay, then is the time to focus on stricter policing that will weed out rogue employers.

Sources

  1. https://www.aspirepartnership.co.uk/News/3197/glaa-publish-new-licensing-standards-including-critical-holiday-pay-standard
  2. http://www.gla.gov.uk/
  3. The Taylor Review: Consultation on enforcement of employment rights recommendations