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Relief for agencies as court confirms holiday pay position

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The Recruitment & Employment Confederation has welcomed an Employment Tribunal decision that ruled that a temporary worker did not accrue holiday leave while on furlough, saying it provides much needed clarity for recruitment agencies.

Mr D Perkins v The Best Connection Group Limited (TBCGL) concerned a contract for services worker who had been placed on the Coronavirus Job Retention Scheme (CJRS).

The Tribunal was asked to consider whether or not the claimant should be entitled to accrue holiday pay while furloughed. It ruled he should not because he was not a worker for the purposes of the Working Time Regulations 1998.

It also highlighted that the terms of his contract with the agency were such that the agreement only existed when he was on assignment. It specified that he would not “receive payment from TBC or its clients for any time not spent on assignment whether in respect of holidays, illness or absence for any other reason”.

As he was unable to work for TBCGL while on furlough, the judge ruled the claimant could not be interpreted to be on assignment.

The ruling is aligned with government guidance on the accrual of holiday pay for furloughed agency workers, which states: “Some agency workers on a contract for services may not be entitled to the accrual of holiday or to take holiday under the Working Time Regulations while on furlough because they are not workers or treated as workers under those regulations when between assignments or otherwise not working on assignments.”

Lorraine Laryea, Director of Recruitment Standards and Compliance at the REC, said: “One of the major issues for recruiters in 2020 as they considered whether to engage with the new Coronavirus Job Retention Scheme (CJRS) to furlough temporary workers, was whether holiday and holiday pay would accrue for those workers who were placed on furlough.

“The REC lobbied the government extensively to release guidance on exactly this, which resulted in advice being published in May 2020. However, this isn’t statutory guidance and it’s important to bear in mind that the judgment is a first instance decision, meaning that other Employment Tribunals presented with similar cases could reach a different decision.

“However, the analysis in this case, which draws out the specific nature of temporary workers on contracts for services and the interaction with the holiday pay legislation and furlough provisions, is compelling and in the view of the REC more accurately reflects how the law should apply in these types of claims.”

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