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Rolled Up’ Holiday Pay:

An Administrative Convenience or Legal Risk?

introduction

While the concept of ‘rolled-up’ holiday pay may seem perplexing, it still holds considerable relevance in today’s UK employment market. The idea revolves around including an employee’s holiday pay in their regular wage, rather than paying it separately when they take their annual leave.

This approach is often associated with flexibility and simplicity, particularly for contract or part-time workers. However, it’s not without its controversies and legal implications, thus necessitating a comprehensive understanding. Our aim in this article is to shed light on the concept of rolled-up holiday pay, its benefits, drawbacks, and its place in the contemporary UK market.

How does rolled up holiday pay function?

“Rolled-up Holiday Pay” is a practice where businesses encompass holiday pay within the regular pay of their workers, instead of disbursing it when the employees take their actual leave.

Despite the ruling in the Robinson-Steele v PD Retail Services case [2006] by the European Court of Justice, the practice of ‘rolled up’ holiday pay still endures in the UK market. The Court stipulates that payment for holidays should be made when the actual holidays are taken, technically rendering ‘rolled up’ holiday pay impermissible.

This ruling was instituted to ensure that workers are not dissuaded from taking their rightful time off due to concerns over finances. The continuation of ‘rolled up’ holiday pay, however, indicates a nuanced situation wherein the practicalities of the working world and the legislative guidelines seem to diverge.

The common critique against the usage of rolled up holiday pay is that it creates a financial disincentive for workers to take their rightful holidays, given they are not being compensated directly during their time off. The European Court encouraged EU member states to take decisive action to terminate this practice. Despite this exhortation, the UK government has yet to promulgate legislation expressly prohibiting the use of rolled up holiday pay.

However, in non-statutory guidance, the government has asserted that any contractual arrangements involving rolled up holiday pay should be subject to renegotiation. This demonstrates the ongoing tension between efforts to ensure fair compensation for workers and the practical considerations of payroll management.

Why is it still in use?

Businesses that employ casual and/or zero-hour contract workers often prefer to use the ‘rolled up’ holiday pay system. The primary reason is convenience. The calculation of a flexible worker’s holiday leave entitlement, along with the corresponding pay, can be a complex and time-consuming administrative task. 

This complexity is amplified by the fluid nature of casual and zero-hour contracts, where work hours can fluctuate significantly from week to week. Furthermore, considering annual leave can create complications when scheduling work rotas. By incorporating holiday pay within the standard pay, businesses find a streamlined solution that circumvents these challenges, despite the potential legal ambiguities involved.

What risks do employers face when utilizing rolled up holiday pay?

Employers who choose to implement ‘rolled up’ holiday pay run the risk of potential double payment. If a worker is able to effectively demonstrate that the structure of their pay has discouraged them from taking their legally entitled holidays, they might be eligible for ‘just and equitable’ remuneration. Consequently, the employer could end up compensating the worker twice for the same holiday period – once within the ‘rolled up’ holiday pay and a second time as a compensatory measure.

An additional implication could be that workers are allowed to defer their holiday entitlement to the subsequent holiday year. If these workers then decide to leave the organisation, they retain the right to demand a payout in lieu of their unused holiday time upon termination of their contract. Hence, while ‘rolled up’ holiday pay may initially appear to streamline administrative processes, it also poses considerable monetary risks for employers.

Additionally, for workers with irregular hours, the ‘rolled up’ holiday pay system may not always equate to an accurate reflection of their holiday pay entitlement. Factors such as fluctuations in their work hours can lead to miscalculations, resulting in either insufficient or excessive payment. This inconsistency can bring about the risk of claims against the business for unlawful deductions of wages. If a worker believes they have been underpaid, they may choose to take legal action, further complicating the scenario for the employer. 

On the flip side, if the worker has been overpaid due to inaccuracies in the ‘rolled up’ pay calculation, it creates a financial burden on the business. This highlights yet another risk factor employers must consider when opting to use the ‘rolled up’ holiday pay system.

What are the necessary steps for businesses implementing rolled up holiday pay?

For businesses choosing to implement the ‘rolled up’ holiday pay system, transparency and clear communication with their workforce is paramount. An initial step in this direction would entail introducing the usage of rolled up holiday pay as part of the recruitment process. Prospective employees should be made aware of this practice from the onset, and written confirmation must be obtained from them indicating their understanding and acceptance of this payment model.

It is essential to emphasize here that, while workers can choose to accept their holiday pay being rolled up into their standard pay, they retain the right to opt for paid annual leave at any point in the future. Nevertheless, it is worth noting that, as per the European Court of Justice, workers cannot completely waive their holiday pay rights. No matter the pay structure in place, these rights remain inviolable and mandatory, thereby ensuring that workers are not disadvantaged in any way.

In essence, while the ‘rolled up’ holiday pay system may provide administrative convenience for employers, its use necessitates open dialogue and mutual agreement with employees to avoid misinterpretation, ensure compliance with the law, and maintain industrial harmony.

As a crucial step towards transparency, employers using the ‘rolled up’ holiday pay system must ensure that payslips issued to workers clearly distinguish between holiday pay and basic pay. This distinction is not merely for clarity’s sake; it is a legal requirement for employers to provide itemised payslips. The payslip should explicitly break down the payment, stating the specific amount attributed to basic pay and the sum designated as holiday pay.

This practice helps to avoid any confusion or disputes regarding payment, enabling workers to fully comprehend their compensation structure. Moreover, it allows for better tracking and validation of whether the holiday pay component aligns accurately with an employee’s entitlement based on their working hours. It is, therefore, paramount for businesses to incorporate this step into their payroll process, ensuring a more transparent and just system.

Lastly, under no circumstances should businesses prevent workers from taking their annual leave. In fact, businesses should ideally adopt a proactive approach in encouraging their flexible staff members to take their holidays. The significance of this cannot be overstated. Holidays are an essential part of maintaining a healthy work-life balance; they provide workers with the opportunity to rest, recharge, and return to work with renewed vigor. As such, businesses must foster a culture that promotes and values time off.

This could involve periodically reminding workers of their remaining holiday entitlement, or perhaps even implementing a system that highlights upcoming periods of lower workload, when taking leave could be most beneficial. Ultimately, the aim should be to create a supportive environment where workers feel comfortable taking their earned leave without fear of repercussion or negative impact on their job security.

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GDPR

FAIR PROCESSING/PRIVACY NOTICE

We care about your information

Direct Response Employment Services is a data controller and data processor for the purposes of data protection legislation. Relevant, authorised members of our staff will have access to the information.

We ask you to share information with us so that we can provide you with work-finding and related services.

This document tells you what you can expect from us and how we will protect your rights.  It applies to information we collect about agency workers, staff members and individuals who work at the companies we do business with.

If you wish to exercise any of your rights, please contact: Mrs Diane Punter – Partner 01225 776500

Why do we process your information?

We process information about you known as ‘personal data’ to enable us to carry out our business as an employment agency for the purposes of permanent recruitment services is as an employment business for the purposes of temporary recruitment services.

By law, we have obligations to ensure that the candidates we place into vacancies are suitable for those positions and that the vacancies are suitable for those candidates.  We have a duty of care to look after the best interests of our customers and to do that we need to collect and process relevant information.

We process some other information to help us make sure we are delivering a service that treats people legally and fairly, prevents human rights abuses, and is always improving.

Who will we share information with?

Client organisationsIn order for our client organisations to consider workers for opportunities within their businesses, we need to share worker information with them. We have contracts in place with these organisations that require them to treat worker information as confidential before we share worker information with them.
WorkersIn order to perform our recruitment services (such as arranging interviews, for example) we often need to share client contact information (such as name, job title and contact details) with workers.
Auditors & InspectorsFrom time to time we may be audited by third parties to ensure that we are operating a legally compliant and ethical business.  These third parties may include: Government regulatory and enforcement audits independent social compliance audits Client audits
OtherIf we would like to share your data with anyone not covered in this privacy notice (such as sharing testimonials with potential customers, for example), we will only do this where we have a legitimate reason to do so and where required will ask for your specific consent to do so.

What are your rights?

All individuals have the following rights regarding their personal information (also called ‘personal data’)

The right to be informedYou have the right to know what information we hold about you, what we are using it for, who we are sharing it with, how long we are keeping it, and on what basis we are processing the data.  While we always prefer to process data based on your explicit consent, as a recruitment organisation we also have a ‘legitimate interest’ in processing your data to ensure we are matching you to suitable vacancies.  There are also times when we have to process your information because we are required to by law.
The right of accessIf you would like to see the records we hold on file for you, please contact Mrs Diane Punter.  All requests must be made in writing and will be dealt with within 30 days.
The right to rectificationIf you believe we are holding incorrect information, you can ask us to correct it.
The right to erasureYou can ask us to remove your information from our records.  As long as there is no legal requirement for us to keep them (for example, HMRC require us to keep payroll records for 6 years), we will remove your details. This will mean that we won’t be able to contact you with any work opportunities in future.
The right to restrict processingInstead of asking to be removed, you can ask us to stop processing it – so you can ask us to stop contacting you about work opportunities, for example.
The right to data portabilityIf you want to take your data to another organisation, please contact Mrs Diane Punter – Partner 01225 776500.
The right to objectYou have the right to object to your data being processed on the basis of legitimate interests, direct marketing, and processing for statistical purposes.  We will stop processing your information immediately unless there are legal reasons for us not to do so.
The right not to be subject to automated decision-making (including profiling)You have the right to object to automated decision-making. We do not use automated decision-making in our recruitment process.

What information do we collect? How do we use it? How long do we keep it?

This privacy notice has been divided into sections so that you can read the information relevant to you. Each section tells you what information we collect, how we use it, and how long we will keep it for.  These sections are:

  • Agency workers
  • Staff members
  • Individuals who work at the companies we do business with

You may wish to have 3 separate documents or one combined document. If you have separate documents each one will need to include the sections above

AGENCY WORKERS

Agency Workers are workers we supply to work with our client companies.

What information do we collect?

We collect personal data from you in order to fulfil our contract with you, to comply with our legal obligations and where it is in our legitimate interests in order to provide you with work seeking services and to supply our clients with labour.

This will include:

  • Your name and contact details
  • Your right to work status (and to take copies of your passport/other allowable documents)
  • Your skills, experience and qualifications (where relevant)
  • Details about the type of work you are looking for
  • Your next of kin
  • Whether you require any reasonable adjustments in the recruitment process
  • Questions about your work seeking activity, to help us make sure we are protecting your welfare and your rights.
  • Your national insurance number and bank details in order to pay you for any work you do

We may also ask for further information to confirm your suitability for work, which may include:

  • Reference details
  • Health questions relevant to the type of work you are applying for
  • Whether you have any unspent criminal convictions

Once a contract has been offered, we will also ask for the following information:

  • Whether you require any reasonable adjustments to undertake any roles

For some roles, we may use assessments as part of the recruitment process literacy numeracy Manual Handling and these results will be held on file.

How do we use it?

The information we collect will only be used for the purposes of progressing your application for work, or to fulfil legal or regulatory requirements if necessary.  The information we ask for helps us to assess your suitability for work.  You don’t have to provide the information we ask for, but it might affect our ability to provide you with work if you don’t.

How long do we keep it?

We keep the information for either the minimum period we are required to keep it by law, or as defined in our Data Retention Policy or for as long as you give us consent to keep the information.

STAFF MEMBERS

Staff members are those people who work directly for and within our organisation.

What information do we collect?

We collect personal data from you in order to fulfil our contract with you, to comply with our legal obligations and where it is in our legitimate interests as an employer/labour provider to recruit new workers to fill vacancies in our business.

As part of our recruitment process, in order to assess your suitability for employment, we will ask for the following information:

  • Name and contact details
  • Your right to work status (including taking copies of original passport/visa documents)
  • Your skills, experience and qualifications
  • Whether you require any reasonable adjustments in the recruitment process
  • Questions relevant to your ability to carry out the role
  • Whether you have any unspent criminal convictions

Once a job offer has been made and accepted, we will also ask for the following information:

  • Bank details
  • National Insurance Number
  • Your next of kin
  • Whether you require any reasonable adjustments to undertake the role

How do we use it?

The information we ask for helps us to assess your suitability for employment, to enable us to employ you and to fulfil legal or regulatory requirements with us.  You don’t have to provide the information we ask for, but it might affect our ability to employ you if you don’t.

This information is collected, processed and retained because employers have a ‘legitimate interest’ under data protection law to do this.

How long do we keep it?

If you are successful in your application for employment with us, we keep the information you provide for either the minimum period we are required to keep it by law, or as defined in our Data Retention Policy or for as long as you give us consent to keep the information.

If you are unsuccessful in your application for employment with us, the information will be kept on file for one year after the end of the recruitment process for that role.

Once you are working with us, your employee record will include other relevant information, including:

  • Training records
  • Appraisal and performance review records
  • Sickness absence records
  • Correspondence records (including disciplinary and grievance meeting notes where relevant)

Your employee record will be retained for the duration of your employment and for differing periods depending on the records as defined in our Data Retention Policy following the end of your employment.

EXTERNAL BUSINESS CONTACTS

External business contacts mean individual members of staff at the supplier, support, client and other organisations we work with to perform the legitimate activities of our business.

What information do we collect?

We collect personal data in order to comply with our legal obligations and where it is in our legitimate interests as an employer/labour provider to do so.

Individuals within the companies we work with are also entitled to have their personal information protected.

We will only share information where it is allowed by law and relevant to our legitimate business activities, such as providing name, job title and contact details when arranging an interview. 

We may also share professional information that is already in the public domain (such as company website pages, LinkedIn profiles, and similar media).

How do we use it?

The information we ask for will only be used in connection with the legitimate activities of our business.

How long do we keep it?

We keep the information for either the minimum period we are required to keep it by law, or for as long as you give us consent to keep the information, whichever is longer.

We will retain contact details for individuals within client organisations while the organisation remains a current or prospective client organisation. 

Individuals within our organisations have the same rights as any other individual (including the right to be forgotten).  Anyone wishing to exercise their rights under data protection legislation should contact Mrs Diane Punter on 01225 776500

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Interview Tips

When it comes to an interview, you can never be too prepared. 

Being selected for an interview is already a success – you have been chosen amongst many candidates, who applied for the position, so research and preparation is essential for interview success.

To help you organise and plan ahead, we have come up with some useful tips to help you along the way and ensure your interview gets off to a great start.

  • Do your research.

Find out as much as you can about the company – start a few days before the interview. Go on their website, find out what sector they specialise in, have they recently completed any major projects?

Does the company have a page on social media? If yes, have a look at posts, feedback, reviews so you can see what the company and its employees are talking about.

Make notes, read them couple of times before the interview and memorise the information. This will help you to be more confident when talking about the knowledge you have of the company.

  • Read the job advert:

Have a look at the job description again to refresh your memory. It is vital you explain why you think you would be suitable for the position and whether you match the qualification and skills required.

  • Common Interview Questions:

Google some of the most common interview questions and write down some of your answers, this will ensure you are prepared and ready to answer. Common questions such as describing yourself, focus on positive points and skills which are relevant for the job. Don’t go into too much detail just a quick summery is enough.  Ensure you write down your strengths for the role and any weaknesses, this is often an awkward question but think of positive ways to overcome these weaknesses to finish on a positive note. 

Some other important points include:

Outfit – many companies still expect interviewees to dress smartly, so make sure your outfit is suitable.

Punctuality – make sure you arrive at least 15 minutes before your interview to avoid your stress level going up and giving the employer a bad impression.

After the interview – give the interviewer a firm handshake and thank them for their time and opportunity to attend the interview.

As you can see interviews can be less stressful if you take time and effort to thoroughly prepare. If you have any further questions, please feel free to comment below or email us.

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CV Writing Tips

Writing your CV is an important document when job hunting and its important that this is kept regularly updated and is written clearly and easy to read by potential hirers. 

We have included a quick guide to help you in getting your CV in tip top shape. 

  • Use bullet points.

This is a great way to break up text and make it more readable for employers. You do not want to end up with long and detailed sentences that take half of the page, so use bullet points to outline your duties/responsibilities in a simple and neat way.

  • Keep it to two pages.

The most effective CVs are not just informative, they’re also concise. Try and get straight to the most important points, and ideally take up no more than two sides of A4, 3 at the max. If you have had a long career history, try and focus on just the last 10 years. 

  • Include a personal statement.

A significant number of people neglect to include this at the start of their CV which is a big mistake, as this can be the selling point. Write few sentences right at the top of the first page, illustrating your unique skills that make you a perfect match for the role. Ensuring you update this for every role that you apply for. Clearly outline the kind of role you are applying for and why and try to include the top three most relevant skills very briefly.

  • Work in chronological order.

Whether you are writing about your experience or your education, the most recent information is the most important. Always put it first.

There is also some common mistakes to avoid when creating your CV which we have detailed below. 

  • Do not choose inappropriate font and size.

Times New Roman is one of the most commonly used fonts, but you may find that Cambria or Calibri are better options for you. The ideal font size is 11 – remember, the hiring managers will be scanning your CV, so it needs to be nice and easy to read.

  • Do not Include irrelevant person information.

You don’t need to include your nationality and you definitely don’t need to mention your age. Although employers aren’t legally allowed to dismiss your application based solely on how old you are, you’ll never know if that’s the reason they rejected you, so it’s best to avoid mentioning these types of details.

  • Do not Include negative information.

If you are thinking of putting on your CV reasons why you left your previous positions, or perhaps that you have driving licence points or that you failed exams – forget it now. This is something you can explain in a job interview, so make sure you don’t include any negative information that would discredit you.

Once you have completed your CV, don’t forgot to read through and double check, use spell check to correct any spelling mistakes and ask a friend or family member to look it over. 

If you are struggling to write you CV there are services out there which can assist, most known job sites have a free CV builder tool or the national career services can assist for free.