The right to holiday

The European Court of Justice recently granted UK temporary workers the right to four weeks' holiday pay. Until now, such workers were only entitled to paid leave after working 13 consecutive weeks with an employer. However, in the case of Broadcasting and Entertainment etc. Union (BECTU) vs Secretary of State for Trade and Industry, the court found this legislation to be unlawful, and the UK government must now amend its regulations on the subject.

Who is entitled to holiday pay?
The government defines a "worker" as anyone who has entered into, or works under, "any other contract", whether express or implied, oral or in writing, "whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual".

While this would exclude those who are genuinely self-employed in business on their own account – who typically have their own tools and invoice their customers or clients for their services – it is broad enough to apply to agency workers and some labourers and contractors taxed under the Construction Industry Scheme. The entitlement is available to both full-time and part-time workers (on a pro rata basis).

How are temporary workers affected?
The government has already proposed to amend its regulations in the following way:

Some are already questioning whether the monthly accrual of holiday entitlement is itself a breach of the regulations

• Remove the provision that imposes the 13-week qualifying period;
  
• Introduce a system for paid annual leave to accrue during the first year of employment at a rate of one-twelfth of the entitlement for each month worked.

These changes will ensure that any worker starting a new job on or after the date that the revised regulation comes into force both accrues holiday on a monthly basis and is entitled to paid holiday immediately on commencement of that job. The proposed regulation provides that the entitlement is to be calculated on the basis that one-twelfth of the annual entitlement is accrued for every month worked. Based on a five-day week, this works out at 1.66 days paid holiday a month. To avoid confusion, the regulation also allows for the entitlement to be rounded up or down, as appropriate, to the nearest full day.

How will employers be affected?
It is estimated that the new ruling will cost UK businesses up to £150m. Domestic law will now have to be amended to comply with the revised Working Time Directive.