Category Archives: zero hours holiday pay

Tips on Rolled Up Holiday Pay

In 2006 the European Court of Justice ruled that rolled up holiday pay was illegal, however, almost rolled up holiday payten years later some businesses in the UK still use this to pay casual staff on zero hours contracts.  The law in the UK remains confusing on this issue so here are some tips on rolled up holiday pay.

The decision by the ECJ decided three things:

1) it is contrary to the working time directive for holiday pay for statutory holidays to be rolled up into normal pay instead of actually being paid during the holiday.

2) Countries who are members of the EC must take ‘appropriate measures’ to ensure that the practice of rolling up ceases.

3) However sums already paid would still count towards pay for holidays.

When the decision came from the ECJ it took a year for the UK government to state that rolled up holiday pay was unlawful.  However, the focus was on the worker to approach their employer to re negotiate the contract and if the employer was unwilling to then the worker could go to an employment tribunal.  Many casual workers on zero hours contracts have precarious security with their employment as the terms are mutual no obligation.  The employer has no obligation to offer the worker work and under these circumstances an employer if challenged could arguably decide not to  provide any further work to that person.  For the worker to take a case to an employment tribunal they would need to pay a hefty fee which is arguably prohibitive for someone who has received a relatively low wage then ultimately may have no income.  These two things create a barrier for a worker trying to sort out rolled up holiday with their employer.

Nevertheless, the ideal thing is for an employer to review and amend a zero hours contract that operates rolled up holiday pay and this is what I would advocate given that the government decreed, in accordance with the Working Time Directive, that holiday pay should be paid at the time of holiday. To renegotiate the contract there should be consultation and written agreement in the form of a signed new contract.  To comply with the government’s proposal an employer should keep accurate records of hours worked and provide holiday pay when the worker actually requests holiday.

However, this can be quite onerous if a business operates with a large pool of casual workers on zero hours contracts and in many cases casual workers like to have rolled up holiday pay.  If a business wishes to continue to operate rolled up holiday pay because they find that easier there are ways to reduce the risks and costs of an employment tribunal claim.

The main principle is to operate rolled up holiday pay comprehensively and transparently.  Workers should clearly know and understand how the process will operate.  As with all things HR, written records are essential for the paper trail.  Rolled up holiday pay should be clearly stated in the contract showing the 12.07% allowance in the hourly rate.  Wage slips should also clearly show the percentage payment of rolled up holiday pay.  In addition the employer should operate a holiday booking system where workers have to book their 5.6 weeks pro rata holiday and be encouraged to take their entitlement in a twelve month period.  If that is proving difficult because a worker is doing many hours on a weekly basis that is a definite impetus for the employer to review and amend the contract to accurately reflect the working practices with an employment contract.


SJ Beale HR Consult – Approved Advisor for Government Growth Vouchers

SJ Beale HR Consult is now an approved advisor for government growth vouchers and can delivergrowth vouchers strategic start-up advice to small and medium sized businesses as part of the Growth Voucher programme.

The new Growth Vouchers scheme offers advice and guidance to businesses taking part and subsidies of up to £2,000 towards the cost of that advice to successful applicants. The programme will then monitor SME performance over the coming years in order to assess the impact that advice has had.

SJ Beale HR Consult can help put strong foundations in place to equip managers with essential HR skills and a strong HR framework to support the business.  Employees are the life blood of any company and should be managed fairly and reasonably with employment law.

The Growth Voucher marketplace provides an accessible and cost effective stepping stone for those people forming a new business”. 

The marketplace is designed to make it much easier for businesses to find providers of strategic advice on key HR topics like:

• Developing skills and employing staff.

• Improving leadership and management;

• Developing skills and employing staff.

Businesses that have been running for a year, with fewer than 50 employees, and have not paid for strategic external advice in the past three years will be able to apply at

They will go through a process which will help them identify what sort of advice they might benefit from. Small business network Enterprise Nation has developed a marketplace for business advice where participants will then be able to find a qualified adviser at The Growth Vouchers programme will run until March 2015.

About Enterprise Nation Enterprise Nation is a small business network with more than 75,000 members. Its aim is to help people turn their good ideas into great businesses – through expert advice, events, networking and inspiring books. Enterprise Nation was founded in 2005 by Emma Jones MBE also co-founder of StartUp Britain. Enterprise Nation is also heading up a new initiative which seeks to represent the needs of entrepreneurs, called the Entrepreneurs’ Alliance. It is an umbrella pressure group that includes the Federation of Small Businesses (FSB), the Federation of Private Businesses (FPB) and School for Startups, and think tanks Centre for Entrepreneurs and The Entrepreneurs’ Network (TEN) which between them represent 2.5m businesses.

For more information on the Growth Voucher programme and instructing SJ Beale as your HR advisor call 0845 241 1868.


Government Bans Exclusivity in Zero Hours Contracts – Storm in a Teacup?

The government has just set out its proposed plan of action to ban exclusivity in zero hourszero hours contracts contracts in the face of increasing pressure to address alleged abuses.  Exclusivity clauses allow a worker to work for only one employer and given the no obligation nature of a zero hours contract this is just not fair and reasonable.

The government will also consult further on how to prevent rogue employers evading the exclusivity ban.  It will also be working with employers and unions to develop a code of practice on the fair use of zero hours contracts which will be available by the end of 2104 as well as developing improved guidance on workers employment rights. 

Labour is also proposing some introductions, should it come to power, which include: 

– no obligation to be available outside contracted hours;

– a ban on exclusivity;

– a right to compensation if shifts are cancelled at short notice;

– transparency over their employment status, terms and conditions;

– the right to request a contract with a “minimum amount of work” after six months with an employer – this could only be refused if employers could prove their business could not operate any other way;

– an automatic right to a fixed-hours contract after 12 months with an employer.

In my experience with zero hours contracts few employers use exclusivity clauses in them so all this seems to me to be a storm in a teacup.

In the meantime, attention is focused on the wording of the ban in the Bill announced on the 25 June. The challenge is on for how the Government will construct a legislative approach that works. There is no tried and tested statutory definition of a zero hour contract so the potential danger is that any new wording could inadvertently impact on other forms of employment where exclusivity is currently lawful and common practice.

Research suggests that some of the bad practices associated with zero hours contracts flow from a general lack of understanding, amongst both workers and employers, about their nature including employment status and entitlements. The Government hopes to address this knowledge gap by making new information and guidance on zero hours contracts widely available together with a new code of practice.

Employers should anticipate increased interest in the employment status and statutory rights of those on zero hours contracts following the government’s push on transparency. In anticipation, reviewing employment status, ensuring statutory entitlements are properly granted, including holiday pay, and improving the way that zero hours contracts are communicated and understood by managers and workers are all sensible precautions to take.  A good HR consultant can help in this regard. 

Ten Top Tips For Zero Hours Contracts

settlement agreement

Source: Free Digital Images

Zero hours contracts have been in the news stirring up a controversy in recent months due to misuse by some rogue employers so much so that the Vince Cable will be looking at them very closely.  A consultation process has been launched  Zero hours contracts have been in place for many years without much trouble, but since the recession they have been used increasingly creating job uncertainty for many and low pay conditions. They are ideal for students and individuals who are only seeking occasional work, but not ideal for individuals with heavy financial responsibilities such as a mortgage.  Zero hours contracts do have many benefits for employers allowing a flexible workforce that can grow or diminish according to workload demands.  Here we list ten top tips for zero hours contracts.

1. Use zero hours contracts reasonably.  They are ideal to flex your workforce when workloads have peaks and troughs and there is not a constant need for certain members of staff.  Having a pool of workers to call upon is ideal.   Any who regularly refuse work should be removed from the company’s books.

2. Zero hours contracts should not be given to staff who you use on a very regular basis otherwise the staff could claim enhanced employment rights.  Pulling different employees from the pool is best so that the working arrangement is very ad hoc.  Employees who are used regularly might be best suited on a fixed term, annualised hours or part time contract.

3. If you decide at the last minute you don’t need to call an employee on a zero hours contract into work, if you have already pre-arranged that they will work you should pay them.  The CIPD recommend as a minimum paying their travel expenses and one hours pay as compensation.

4. Ensure you provide staff on zero hours contracts with written employment terms and conditions which is required by the Employment Rights Act 1996.  The terms and conditions should be reviewed on an annual basis to ensure that the zero hours contract still reflects the actual working relationship.

5. Do not impose any restriction on staff with zero hours contracts so that they are free to work for other employers.  Therefore remove any exclusivity employment terms and conditions. Zero hours staff should also not be on call without pay or the offer of work.

6. Consider providing comparable rates of pay to staff on zero hours contracts with those on other types of contract.  Whilst this is not essential there is an outside change you might have to justify any wage disparity should this be challenged in an employment tribunal.

7. Ensure staff on zero hours contracts are aware of your company’s employee handbook and HR policies and that they know they should comply with them.

8. Train your line managers in the operation of zero hours contracts to ensure they are managing zero hours staff in accordance with employment law and shifts are issued appropriately.

9.  Keep careful records of zero hours staff working hours to ensure they receive the correct amount of accrued holiday pay.  Holiday pay can be paid on a quarterly basis.  If rolled up holiday pay is used instead it must be clearly shown in the employment terms and conditions (how it is calculated) and in wage slips.

10. Manage the working hours of zero hours staff well by distributing work.  Zero hours staff are not entitled to SSP or maternity pay if they are only allowed to work on an ad hoc basis.  It is therefore lawful that they do  not accrue these employment rights on a correctly used zero hours contract.

Are Zero Hours Contracts Legal?

Yes zero hours contract are legal.  They are contracts that are provided to casual and sessional workers.  They are ideal for an employer wishing to have a flexible workforce to meet fluctuating work demands.  Zero hours contracts are used extensively in the hospitality industry and social care sector.  They operate on a mutual no obligation relationship; the employer has no obligation to offer work and the worker has no obligation to accept the work.  For the employer it is advantageous to have a bank of casual staff to call upon when increased demand arises and to be sure that someone will be available to do that work.   

Zero hours contracts only command pro rata holidays in terms of employment rights and it is important to keep records of hours completed to calculate holiday pay.  Holidays can then be paid quarterly or, if appropriate, on a rolled up basis carefully following the rules for rolled up holiday pay.  Workers with zero hours contract should be used on an ad hoc basis only so that additional employment rights can not be pursued in an employment tribunal.