Rolled Up Holiday Pay

veryconfused20

Good evening all,

I'm really hoping someone can help me - perhaps I'm just being a bit dim tonight but my brain is seriously hurting trying to understand whether the way I am paid holiday pay is lawful.

I am an employee (employed directly by the company, not through an agency), and am contracted to work a fixed 37.5 hours per week.

When I started working for my employer some time ago, it was agreed that I would earn £18,000 per year - hourly paid rather than salaried however.

My contract states that my basic hourly wage is £9.36, and that I will be paid an additional 14% (aka. £1.31) on top of this to cover my holiday as I am not paid when I take it.
Just to be clear, if I were to work 150 hours in a month, I would be paid £1,600 (150*9.36*1.14); whereas if I worked only 75 hours and took the other 75 as holiday, I would receive £800 (75*9.36*1.14). I'm not trying to insult anyone's intelligence by being so 'obvious', just being as clear as possible.

The amount is shown separately on my payslip, and my hourly wage in my contract was portrayed as being £9.36 + 14% not £10.67.

Can anybody please tell me whether this is (unlawful) rolled up holiday pay? I'm not sure if I'm interpreting the information on sites like Gov.UK/Citizens Advice correctly as there are no examples. I have spoken to ACAS who confirmed RUHP is wrong but I am still confused as to whether that is what I am receiving.

If I need to supply more information, please just ask.

Thank you for reading!

Undervalued

As far as I know rolled up holiday pay is not lawful.

However, you don't seem to be losing out here financially.

The statutory minimum holiday is 28 days and by my maths you would actually be a fraction worse off if you were paid the lower figure (i.e. without the 14%) then got your 28 days paid holiday in the normal way.

If I remember correctly the normal figure used for holiday calculations is 12.7%.

It might be that your firm gives "normal" employees more than 28 days holiday (perhaps 30) and this is what they are trying to reflect?

General_Grant

veryconfused20 wrote: »

Good evening all,

I'm really hoping someone can help me - perhaps I'm just being a bit dim tonight but my brain is seriously hurting trying to understand whether the way I am paid holiday pay is lawful.

I am an employee (employed directly by the company, not through an agency), and am contracted to work a fixed 37.5 hours per week.

When I started working for my employer some time ago, it was agreed that I would earn £18,000 per year - hourly paid rather than salaried however.

My contract states that my basic hourly wage is £9.36, and that I will be paid an additional 14% (aka. £1.31) on top of this to cover my holiday as I am not paid when I take it.
Just to be clear, if I were to work 150 hours in a month, I would be paid £1,600 (150*9.36*1.14); whereas if I worked only 75 hours and took the other 75 as holiday, I would receive £800 (75*9.36*1.14). I'm not trying to insult anyone's intelligence by being so 'obvious', just being as clear as possible.

The amount is shown separately on my payslip, and my hourly wage in my contract was portrayed as being £9.36 + 14% not £10.67.

Can anybody please tell me whether this is (unlawful) rolled up holiday pay? I'm not sure if I'm interpreting the information on sites like Gov.UK/Citizens Advice correctly as there are no examples. I have spoken to ACAS who confirmed RUHP is wrong but I am still confused as to whether that is what I am receiving.

If I need to supply more information, please just ask.

Thank you for reading!

What I have put into red is very important. Because it is shown separately, they can get away with paying you holiday in this way - as long as they also allow you to take holiday and don't make you work every week, perhaps only allowing bank holidays.

veryconfused20

Undervalued wrote: »

As far as I know rolled up holiday pay is not lawful.

However, you don't seem to be losing out here financially.

The statutory minimum holiday is 28 days and by my maths you would actually be a fraction worse off if you were paid the lower figure (i.e. without the 14%) then got your 28 days paid holiday in the normal way.

If I remember correctly the normal figure used for holiday calculations is 12.7%.

It might be that your firm gives "normal" employees more than 28 days holiday (perhaps 30) and this is what they are trying to reflect?

I do agree that perhaps I would be worse off financially if I were salaried, however the fluctuation of my pay each month is making it difficult to take out a mortgage. I was hoping that if I am receiving RUHP and could show my employer that it isn't supported as Acas suggested it isn't , they would at least consider putting me onto salaried.

veryconfused20

General_Grant wrote: »

What I have put into red is very important. Because it is shown separately, they can get away with paying you holiday in this way - as long as they also allow you to take holiday and don't make you work every week, perhaps only allowing bank holidays.

Is showing it separately enough? I read that so long as the holiday pay is a "genuine addition to your wage" that it's not a problem; it's when it makes up part of your basic pay that it is unlawful.

Also, I thought that you should be paid when you take holiday rather than having it staggered over the year?

Sorry, I'm not disagreeing with you; just trying to understand what of the things I've read is true and how it impacts me (if at all).

Thanks for responding though :-)

Undervalued

veryconfused20 wrote: »

I do agree that perhaps I would be worse off financially if I were salaried, however the fluctuation of my pay each month is making it difficult to take out a mortgage. I was hoping that if I am receiving RUHP and could show my employer that it isn't supported as Acas suggested it isn't , they would at least consider putting me onto salaried.

I'm no expert on the mortgage situation I'm afraid. Presumably it is perfectly possible to budget by putting 14% of your pay to one side in months when you don't take any holiday.

How long have you been employed? More than two years? Particularly if it is less than that I would give careful thought to whether it is wise to rock the boat.

Also, the normal holiday percentage is 12.07% and not 12.7% as I said earlier. You would therefore be giving up almost £350 per year.

veryconfused20

Undervalued wrote: »

I'm no expert on the mortgage situation I'm afraid. Presumably it is perfectly possible to budget by putting 14% of your pay to one side in months when you don't take any holiday.

How long have you been employed? More than two years? Particularly if it is less than that I would give careful thought to whether it is wise to rock the boat.

Also, the normal holiday percentage is 12.07% and not 12.7% as I said earlier. You would therefore be giving up almost £350 per year.

I am extremely good at budgeting, but it hasn't filled banks and such with confidence when I can one month go from earning ~£1,500 (net) one month to less than £1,000 the next. As I cannot guarantee how much I will earn each month, I'm deemed risky apparently.

I've been there for over two years, I am one of two in my team who are paid this way.

Again, I appreciate I would lose out financially but I am losing more than that a year by staying in privately rented accommodation rather than taking out a mortgage and beginning to pay it off.

getmore4less

Fairly standard to treat a year as 52 weeks 5*7.5hr days per week.

260 days, 1950 hrs.

£18000/1950 is £9.23ph.

If you took statutory holidays(5.6 weeks 28days) then you work 1740hrs

@ £9.36+14% that's £18567.

getmore4less

How do they manage holiday days?

veryconfused20

getmore4less wrote: »

How do they manage holiday days?

What do you mean sorry?

veryconfused20

getmore4less wrote: »

Fairly standard to treat a year as 52 weeks 5*7.5hr days per week.

260 days, 1950 hrs.

£18000/1950 is £9.23ph.

If you took statutory holidays(5.6 weeks 28days) then you work 1740hrs

@ £9.36+14% that's £18567.

Sorry, forgot to add there was a small payrise about 18 months ago.

I also have to take an additional three days at Christmas so I would take 31 holiday days per year.