Pay roll-up obscures true employment costs

Rolled-up holiday pay can give an unfair advantage to temporary agencies
using the practice and obscure costs to clients and staff, according to
recruitment firm Reed Executive.

The company, which does not roll up holiday pay, complained that the
practice creates an unbalanced market for temporary staff and was unfair on
both staff and clients.

"Unfortunately, within the UK recruitment industry it is common
practice for agencies to pay rolled-up holiday pay," said Joan Edmunds,
legal director of Reed Executive. "This can give such agencies a
competitive edge as temporaries believe they are receiving a higher rate of pay
without realising they will not be paid when they take their holiday. If this
practice remains widespread then Reed may be forced to reconsider its position.

"We will be watching the outcome of the case [before the ECJ] with some
interest," said Edmunds. "Reed temporaries receive holiday pay when
they take their holiday entitlement. This encourages them to take their holiday
in accordance with health and safety objectives of the legislation. Reed stands
in favour of any judgment that protects temporary workers and clients.

"If the judgment goes in favour of temporary workers and against
rolled-up pay, then some agencies may find themselves having to pay out holiday
pay on top of what they are already paying to their temporaries – an additional
cost they should not pass onto employers."

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