Holiday entitlement and the Agency Workers Regulations

Because of the recruitment agency’s responsibility to pay the agency worker, and the fact that agency workers usually request their holiday from the agency and not the hirer, how to operate holiday entitlement is more of an issue for the agency themselves rather than the hirer. However, the hirer still has an important part to play in this area of equal treatment because they must communicate to the agency relevant information in relation to holiday entitlement to the agency. Even prior to the implementation of the Regulations, agency workers still fell into the definition of ‘workers’ under the Working Time Regulations 1998 therefore have always been entitled to the minimum level of annual leave as any other worker.  This is currently 5.6 working weeks per year, which equates to 28 days per year for a 5 day week worker. The majority of employers therefore provide the minimum amount of holiday entitlement therefore, where this is the case for the assignment the agency worker with 12 weeks’ service is currently on, agencies need simply operate as before. However, where the hirer provides a more enhanced entitlement than the statutory minimum to their directly recruited employees, this means that the agency worker too must be given that additional amount, after 12 weeks on the assignment, on top of that amount already provided by the agency. For example, if a hirer provides 6 working weeks to their directly recruited employees, but only 5.6 working weeks to agency workers, this is fine for the first 12 weeks of an assignment, however the hirer can, if they choose, provide the agency worker with 6 weeks from the start. From the start of the 13th week of the assignment, the holiday entitlement must increase to 6 weeks pro rata for the agency worker. In this circumstance, an agency has three options. A calculation of the additional entitlement should be made and then either of the following can be done: • allow the extra holiday to be taken as time off, in the same way as with the 5.6 week entitlement; or • initiate a ‘rolled up holiday pay scheme’ in relation to only the additional entitlement offered over and above 5.6 weeks and convert this extra entitlement into monetary value, giving the extra pay as part of the hourly rate; or • initiate a ‘rolled up holiday pay scheme’ in relation to only the additional entitlement offered over and above 5.6 weeks and convert this extra entitlement into monetary value, giving the extra as a one off payment at the end of the assignment. Generally, rolled up holiday pay should not be administered (though liability in some cases will be nil), however, it will be allowed for the purposes of the Agency Worker Regulations only. It should be noted that rolled up holiday pay can only be used in relation to the element of holiday entitlement provided over and above 5.6 weeks. Payment in relation to the statutory minimum of 5.6 weeks must be given when the holiday is taken. Whichever method is chosen by the agency, this should be made clear to the agency worker at the start of the entitlement. If you have any queries regarding this issue please call our 24 Hour Advice Service on 0844 892 2772.