NEWS

20 Mar 2017

Rolled up holiday pay not holiday pay

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In Robinson-Steele v R D Retail Services Ltd C-131/04, [2006] IRLR 386, the ECJ held that “rolled up” holiday pay was incompatible with the Working Time Directive, but left the door open for setting off sums actually paid under “transparent and comprehensible arrangements” (the test adopted subsequently by the EAT, e.g. by Elias P in Lyddon v Englefield Brickwork Ltd [2008] IRLR 198).

The employment tribunal decision in Rodliffe v SOS Parking is a useful reminder to employers of the dangers of using rolled-up holiday pay.

The Claimant claimed that a rolled up holiday pay clause was in fact a sham and that the employer only introduced such a clause in response to the Claimant’s concerns about not receiving holiday pay; as such there was no additional holiday pay and he was dissuaded from taking leave. The Tribunal agreed with him, noting that the purported percentage uplift set out in the contract became inaccurate when the Claimant subsequently received a pay rise. Thus the employer was unable to prove that the arrangements were not transparent and comprehensible.

Other allegations of unfair dismissal and wrongful dismissal were also successful. The parties were able to reach an agreement on compensation and costs, so whether the Claimant could claim accrued leave dating back a number of years remains one of a number of unresolved legal issues relating to accrual.

The Claimant was represented by Mukhtiar Singh