Holiday Pay: Q&A

Assuming you are in fact using a percentage-based method (which most employers in television and film tend to use) you may use either 12.07% or 10.77% (or a combination of the two) for all workers you engage.

No. That is not correct.  

In fact, Pact’s view is that there are good grounds for paying all freelance workers at the same rate, whether that is 12.07% or 10.77%. It is worth bearing in mind that using 12.07% across the board means more holiday pay being held back, therefore less net pay being paid out during the term of the engagement. 

Ultimately, Pact’s position is that all production companies should comply with the law on holiday pay. However, this is a complex area with the recent changes to holiday pay a direct result of having to address some of the issues raised by the Harpur Trust v Brazel case. (In that case a music teacher was contracted throughout the year but only paid to work during term time, so her holiday pay was calculated using only part of the year). 

In other words, the changes to the law have not been made with the unusual nature of short term freelance contracting that exists in film and TV production in mind.

It may be preferable to do so but the law does not oblige an employer to pay holiday pay at any particular percentage, nor does it stipulate that a percentage-based method must be used.

Yes, absolutely. Employers may want to consider applying 12.07% across the board to all categories of workers.

Yes. 

A key part of the legislation in this regard is the choice given to employers as to whether they apply the new rules.  

While the new legislation confirms that it will be lawful for employers to use a 12.07% accrual rate if they engage ‘irregular hours’ or ‘part-year’ workers, it does not state that accruing holiday pay at 10.77% or using any other method of calculating holiday pay (such as a non-percentage-based method) is unlawful.

In other words, employers may currently choose to continue accruing holiday pay at 10.77% for any category of worker including part-year and irregular hours workers.

No, unless their holiday pay is rolled up (see category below).

However, 12.07% is the rate suggested by the new regulations as the rate to use for part-year and irregular hours workers.

No. That is not correct. As set out above, employers may choose which rate to apply and indeed whether to use a percentage-based method at all.

In theory, yes. But, there is a potential danger with doing this as ostensibly you would be treating workers working on the same project differently. There may be justifiable reasons to do so, but Pact’s view is that it is safer for an employer to apply the same percentage across its workforce.

The regulations state:

“A worker is an irregular hours worker, in relation to a leave year, if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable.” 

The most obvious examples will be daily crew members where they are contracted over more than one pay period, supporting actors or those who perform their roles on an ad-hoc basis.

A pay period is how often someone gets paid. This is usually weekly or monthly. For example, a daily might work 20 hours in one pay period, 10 hours in another, 30 hours in another. Their hours are variable because they work only when required by the employer.

On TV productions, most crew are hired to work several weeks or months, working a standard pattern. On scripted productions, this is usually 50 or 55 hours per week, five days a week. Hours in non-scripted are often more variable, but crew still normally work a consistent five days a week. The majority of crew will therefore work regular hours in each pay period and will not be captured by the scope of the new legislation. 

So, in summary, most crew do not work irregular hours.

Yes. Because they will have been contracted for one pay period only. On that basis a daily will not be classified as an irregular hours worker. To be so classified, a daily would have to be engaged by the same employer over more than one pay period and work different hours in those pay periods.

Yes. Someone engaged in this way would inevitably work irregular hours in each pay period.

These will be irregular hours workers assuming they work for you for more than one pay period, and work differing hours in those pay periods.

This would mean that that person was working irregular hours across the pay periods of the contract, so yes they would be an irregular hours worker.

It would be neither. It would not be an irregular hours contract as the hours would not be irregular in each pay period. It would not be a part-year contract unless it contained a period of at least one week where that person remained under contract but was not required to work and was not paid.

The regulations state:

“A worker is a part-year worker, in relation to a leave year, if, under the terms of their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid.” 

In TV, there are no obvious roles that would be regarded as ‘part-year’ workers unless the engagement includes a period of at least one week where the worker is still engaged (i.e. cannot work elsewhere) but is not required to provide services and is not being paid. 

In summary, most crew are not part-year workers, but there will be scope for crew to fall into this category if there are unpaid breaks of at least one week in production.

Yes if they are not paid during this hiatus. An unpaid hiatus of one week or more where the worker is contracted and not paid will put that worker into the category of “part-year worker".

This would depend on whether they remain contracted to the original employer for an unpaid period of at least a week. If they are then they will be classified as a part year worker.

Rolled-up holiday pay is where the employer pays out the holiday pay element of the agreed rate at the same time as the rest of the pay packet. In other words, the holiday pay is rolled into the (usually) weekly pay. This has not been a lawful practice until the new legislation – the reason it has not been allowed is that by paying someone their holiday pay each pay period you are depriving them of the opportunity to take leave.

Yes, the new regulations allow this in very specific cases only – for irregular hours workers and part-year workers, and only if you use 12.07% as the holiday pay calculation. (There are also some other conditions to fulfil – from a more administrative perspective).

Yes. Because it would not be legal to roll up holiday pay for those categories of worker, 12.07% of their rate would be held back until the end of the contract and paid out then (less any days taken as annual leave).

You can only choose to roll up holiday pay if you pay at 12.07% and the worker in question is a part-year worker or irregular hours worker.

In theory yes, but assuming the payment is made at the end of the contract, it is also not ‘rolled up’.

You could choose to apply the same rate throughout both contracts, or you could choose to vary the rate at the time the fixed term contract was drawn up. If you wished to roll up the holiday pay element that would only be permissible whilst that person worked irregular hours in this case.

Yes you could (even if the contract lasts for several months), provided the other conditions of rolling up are met.