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DTI guidance on working time regulations

July 2006 - Employment. Legal Developments by Clifford Chance.

The DTI Guidance on the Working Time Regulations 1998 has now been amended to reflect the European Court of Justice’s (ECJ) decision in Robinson-Steele v RD Retail Services Ltd and others, in which it was held that rolled-up holiday pay arrangements infringed the EC Working Time Directive.

Interpretation of Robinson

The Court held that employers should be paying employees for holiday at the time that they take their holiday. The ECJ also went on to find that an employer was entitled to offset from their pay any holiday pay element of a rolled-up rate. Many commentators took this to mean that, in practice, continuing to pay rolled-up rates would be acceptable, despite the ECJ's comment that member states were under an obligation to ‘take the appropriate measures to ensure that practices incompatible with the Directive are not continued'.

Amended guidance

In response the DTI Guidance has now been amended. It advises employers to renegotiate contracts involving ‘rolled-up' holiday pay for existing workers as soon as possible, so that statutory holiday pay is paid at the time when holiday is taken. The DTI's view is that the ECJ's judgment allows for offset of payments already made until the practice is discontinued. The Guidance states that payments already made for work undertaken can be offset against any future leave payments made in the proper time, provided these payments have been made in a transparent and comprehensible manner.

Robinson-Steele v RD Retail Services Ltd and others [2006] IRLR 386

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DTI guidance on working time regulations