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Employers committing “wage theft” over holiday pay

Employees don’t understand their holiday entitlement, with particular uncertainty around temporary workers’ rights according to BEIS research

Employers that are failing to give workers the holiday pay they're entitled to are engaging in “wage theft”, the Gangmasters and Labour Abuse Authority (GLAA) has warned.

“There have been cases where employers have not sent a worker a P45 or not given them the holiday pay they are entitled to because they work an irregular shift pattern and have assumed they are still on the books. Even worse, there are some employers who are aware that the temporary workforce is unsure of [its] rights and have an attitude of ‘if they don’t know, don’t tell them’,” Darryl Dixon, director of strategy at the GLAA, told HR magazine.

“We want to be clear that failing to give someone the holiday pay that they are entitled to is wage theft. Action must be taken on this; because once you start to chip away at one area of workers’ rights you’ll begin to see more and it becomes endemic.”

Dixon's comments come as research from the Department for Business, Energy and Industrial Strategy (BEIS) revealed that a high number of employees do not understand their holiday pay entitlement.

Confusion is especially prevalent around holiday entitlement for workers on zero-hours contracts, with half (50%) of all workers incorrectly thinking people on zero-hours contracts are not entitled to holiday pay.

The survey also found that 75% of workers believed that all workers, apart from the self-employed, are entitled to holiday pay, but just 69% of atypical workers (those not employed on full-time or part-time permanent contracts) thought this. Over a third (35%) incorrectly thought that only people in permanent jobs get holiday pay.

There was also confusion over how soon holiday pay is accrued after starting employment, with 52% believing that you have to work for at least three months before you are entitled to holiday pay.

Separate figures from the Office for National Statistics find that there are approximately 1.8 million people not receiving the holiday pay they are entitled to.

In response to its findings BEIS has conducted an advertising campaign targeted at employers and workers to raise awareness of holiday pay.

Dixon welcomed the move but said educating workers must be the priority: “Awareness will make a difference, but unless there is knowledge for workers on their rights then these patterns of exploitation will be likely to persist.”

He advised HR to be particularly vigilant on holiday pay entitlement for temporary workers.

“Firstly, HR needs to make sure that there is a structured approach towards holiday pay – when it is paid and when it is taken. Secondly, they must look at the procurement and contractual relationship with the temporary workforce, in order to make sure that you are not getting labour from people who are being exploited in any way. They must take an ethical stance, and make sure that their organisation understands there will be consequences for them if they don’t."

BEIS surveyed 2,154 workers for its research, including a sample of 320 atypical workers.