Companies in England could have to pay double holiday pay to contract and
temporary staff if the European Court of Justice overturns the English
interpretation of the Working Time Directive (WTD).
This could have a massive impact on British businesses, which employ more
temporary staff than any other country in Europe, said Paula Rome, training and
development solicitor at law firm Lewis Silkin.
Currently, contractors and temporary staff in England have their holiday pay
‘rolled-up’ in a regular pay packet and take ‘holidays’ after the employment
contract has ended.
To avoid making the double payment for holiday, businesses face
restructuring payment of temporary, seasonal and contract staff employed for
specific periods without the option of taking holiday.
The English interpretation of the WTD could be overturned after the Leeds
Employment Tribunal referred a case to the European Court of Justice in March.
The case will be heard in the next three to six months.
"It could be an incredible cost for some organisations," Rome
said. "My gut instinct is the worst possible case scenario for employers –
they will have to pay holiday on top of the percentage they have already paid.
"There will be very little they can do. If we are working to the wrong
interpretation [of the directive], even the Government cannot do much about
In Scotland, a tribunal has already ruled against the practice of rolled up
holiday pay, creating difficulties in the oil industry, which often employs
staff on short-term contracts.
For the law on rolled up holiday and the Working Time Directive go to www.personneltoday.com/goto/23269