Holiday Pay and Agency Workers
The Government is currently consulting on a proposal to change the way holiday entitlement works for permanently retained part year and irregular hour workers.
The consultation follows last year's high profile Supreme court decision of Brazel v Harpur Trust where the Supreme Court held that permanently retained part year and irregular hour workers were entitled to 5.6 weeks statutory annual leave.
Many temp agency workers are retained on the books of the temp agency and often work irregular hours particularly those who are bank staff and generally supply their services as required. Such persons under the Brazel decision would be entitled to the full 5.6 weeks annual leave.
One of the issues arising is the method of calculating agency workers holiday pay for those who work irregular hours.
By our submission to the Government consultation, we submitted that a monthly accrual of holiday entitlement was a sensible approach upon which to legislate to calculate agency workers' holiday pay. Historically temp agencies have calculated their agency workers' holiday pay on the basic 12.07% of hours worked each month. This may or may not now be appropriate in the light of the Brazel decision.
However, one of the difficulties with the historical approach is that under the Agency Worker Regulations 2010, agency workers are entitled to the same holiday benefits as if they were employed directly by the hirer after a 12 week qualifying period. In circumstances where the hirer operates a more generous contractual entitlement to its permanent staff, the 12.07% figure would need to be adjusted after a 12 week period. Any new legislation arising from this consultation should align with the Agency Worker Regulations 2010 so as to avoid confusion.