Government urges employers to tackle ‘alarming’ lack of awareness over holiday pay

25 Feb 2019 By Lauren R Brown

Businesses told ‘the onus is on you’ to ensure paid leave is correct, as research shows many flexible workers underestimate their entitlement

The government has launched a campaign to prevent workers being “short-changed” over their holiday pay, as research reveals an “alarming lack of awareness” about entitlement from both employers and employees.

The Department for Business, Energy and Industrial Strategy (BEIS) has released new guidelines and an online entitlement calculator to make it easier for both employers and workers to calculate holiday pay, but has said the responsibility ultimately lies with businesses to ensure pay is correct.

The campaign is part of the government’s response to the Taylor review of workers’ rights, and aims to raise awareness over entitlement.

A BEIS spokesperson said: “We want to see more businesses getting holiday pay right for their workers, helping to maintain a fair working environment for all. The onus is on you, as a responsible employer, to check your workers are receiving the correct amount.” 

Alongside the launch of the campaign, BEIS has released research that shows many people not in nine-to-five roles assume they are either not entitled to holiday pay, or are owed less than their actual legal entitlement.

According to an independent survey of 2,000 workers, conducted by Kantar, half of all workers (50 per cent) incorrectly thought those on zero-hours contracts were not entitled to holiday pay. In addition, more than half (52 per cent) incorrectly thought they had to work for three months before they were entitled to holiday pay.

Nicola Inge, campaign director for employment and skills at Business in the Community (BITC), said against a backdrop of falling wages and rising job insecurity, it was critical workers were aware of their rights. “The research published by BEIS highlights an alarming lack of awareness among workers of their rights to holiday pay,” she said.

“We are concerned that unless employers take action to ensure workers are claiming the pay to which they are entitled, we will see an increase in financial hardship as the rising cost of living continues to outstrip wage increases.” 

Legally, every hour worked accrues an entitlement to paid time off, and almost all workers are entitled to 5.6 weeks’ paid holiday per year. This includes atypical workers on zero-hours contracts, agency workers and those who are on contracts that entail irregular hours.

Employees also have the right not to suffer any detriment for exercising their right to receive their holiday entitlement. 

Inge added the business case for increasing awareness was clear, “not least in the health and wellbeing benefits of taking paid holiday”. Citing recent research on health in the workplace, Inge added workers with financial concerns lose on average six days a year more in absenteeism and presenteeism than someone without these concerns.

“We must all play our part in ensuring workers are claiming, and being paid, the holiday pay that they are entitled to,” she said.

According to the BEIS poll, 81 per cent of workers felt productive, happy and refreshed after taking a paid holiday. 

In 2017, the Unpaid Britain report found workers were missing out on £1.8bn in unpaid holiday leave each year. This amounted to 1.8m workers not receiving the minimum holiday pay they were entitled to

Nick Clark, lead author of the report, said: "Paid holidays are worth about 12 per cent of your normal wages, roughly a week’s extra pay for every two months worked. Knowing your entitlement is the first step towards making are you are not short-changed." 

The government’s campaign on holiday pay entitlement is part of a wider package of reforms to workplace rights as part of its response to the Taylor review, which includes proposed legislation to extend the holiday pay reference period. Currently the hours worked over the past 12 weeks determined a worker’s allowance, however under the proposals this would be extend this to 52 weeks, ensuring workers in seasonal or atypical roles get paid fairly for the time off they are entitled to.   

The government has said it planned to introduce this legislation in April.

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