The government has withdrawn a new holiday pay brief that would have had a significant impact on staffing firms that provide ‘contract for services’ arrangements.
Last week, the Gangmasters & Labour Abuse Authority (GLAA), the licensing body for organisations that provide workers to other employers in the UK, published a briefing note that set out its position on the treatment of holiday pay and how to comply with its licensing standards.
According to the Recruitment & Employment Confederation (REC), the briefing note, which has now been removed from the GLAA’s website, indicated that a contract for services which stipulates that there is no contract between work assignments, would not be compatible with its licensing standards in future. This included the REC’s own contract for services.
The briefing note was written following the Supreme Court’s decision in the Harpur Trust v Brazel case, which specified that employers would have to pay all part-year workers at least 5.6 weeks’ holiday pay, not pro-rated, irrespective of the time spent working.
The REC informed GLAA that it strongly disputed its interpretation of the judgment. In a letter to the GLAA earlier this week, REC chief executive Neil Carberry said: “Using this judgment to reach the conclusions presented in your letter represents GLAA making employment law, which is not your role. It is a huge shift from the original scope of the ruling.”
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He wrote: “Our view – supported by our own solicitors and widely-held in the employment law community – is that the Harpur Trust v Brazel case made no finding whatsoever on overarching contracts linking different contracts for services. There was no dispute in Harpur Trust regarding whether the claimant was employed all year round. The claimant was a part-year employee, which is very different from a contract for services worker.
“The REC supports the GLAA’s position that all licence holders must always calculate holiday pay correctly, in line with the statutory requirements. However, we are adamant that the decision in Harpur v Brazel did not dispute her employment status and the fact that she was employed all year round.”
According to the REC, the GLAA has now withdrawn the briefing note, telling it that the government intended to introduce new legislation by the end of this year.
This week the government confirmed it would introduce rolled-up holiday pay for workers with irregular hours or part-year contracts.
REC deputy chief executive Kate Shoesmith said: “We strongly believe the brief contained an incorrect approach to holiday pay for workers on contacts for services. This will provide a great reassurance to many recruiters.”
A spokesperson for the Gangmasters and Labour Abuse Authority said: “Holiday pay forms a key part of the GLAA’s licensing standards and licence holders must maintain records to show that a worker receives paid annual leave to which they are legally entitled.
“We published guidance for applicants and licence holders on valid and invalid methods of calculating workers’ annual leave entitlement and holiday pay based on existing case law.
“Due to the government’s intention to introduce new legislation relating to holiday pay by the end of this year, we have now suspended the brief. Once the detail of any new legislation is known we will then reassess the most appropriate position to take in order to continue to comply with legislation.
“We will continue to work with the industry and compliant businesses to stop labour exploitation, create a level playing field across our regulated sectors, and ensure all workers receive the rights they are entitled to.”
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