How much Holiday Pay should you get - is it 10.77% or 12.07%?
A long, long time ago TV production companies used to say that TV workers aren’t due holiday pay at all as they are mostly freelancers and freelancers don’t get holiday pay. A quaint view, but fortunately one that was put resoundingly to bed by BECTU, who took the case to the European Court of Justice and won.
Now, with a few highly dishonourable exceptions, almost all TV companies recognise that holiday entitlement is right and proper to honour for all those who work on their shows - and good on them for that. But, if the freelancer is unable to take their holiday entitlement during their contract (which is often the case), what is the correct amount of holiday pay that should be handed over when the freelancer leaves - is it 10.77% or is it 12.07%?
This is a question that often arises, but more so in the last few weeks with new regulations which say that it is now legal for companies to “roll up” holiday pay into the rate, for some workers (NB if you do agree a rate with a company, always make sure you add on holiday pay when you make the deal as they may assume it is included in the number you agree).
So 10.77% or 12.07%? Let’s get a little into the weeds first (you can skip this paragraph if you don’t like weeds). The difference in opinion about the percentage to use is down to whether you think that someone earns holiday entitlement while they are on their holiday (the 10.77% brigade) or only earn holiday entitlement for the weeks you are actually working (the 12.07% adherents). Without going into the sums, that is how the two groups line up. So who is right?
Well here’s the thing. Almost every TV company has historically used the 10.77% number for their calculations (ie if no holiday has been taken, the company pays an extra 10.77% of the freelancer’s gross wages at the end of the contract). That is the rate that PACT (boo!) sticks to and one that has largely gone on unchallenged until recently.
But it’s not the number that BECTU (yay!) has ever recognised, always maintaining that it is the 12.07% rate which is correct. And there is now new guidance on this government page which backs up their position.
The page referred to above gives employers a route to follow if they want to calculate payment in lieu of holiday taken. It is only guidance (companies don’t have to use this ready reckoner) but the rate itself is NOT optional. Who says? Says the government sponsored but entirely independent body ACAS, who say that 12.07% IS THE CORRECT RATE TO USE AND THAT THE 10.77% FIGURE IS NOT ONE THEY RECOGNISE.
(Apologies for the shouting but it bears highlighting as some TV companies will not tell you this and - if they don’t believe that this is ACAS’s official position - then do point them in ACAS’s direction and suggest they ask themselves. And you can do it yourself too).
So the long and short of it is that 12.07% is the rate given to use for those companies who want to use the ready reckoner on the new advice. But if companies don’t like that page (and word is coming in that some don’t), they can always ask ACAS what they think is the right percentage to use.
**UPDATE**
Word on the streets is that a number of production companies are still refusing to pay the 12.07% rate, based on advice from PACT.
It seems that these companies reckon it makes perfect sense for there to be two sets of workers in the workforce, with two different entitlements to holiday pay. Interesting idea. There is of course nothing out there from HMRC or any other government body that backs up this novel idea that workers are indeed divisible in that way.
If these companies keep on refusing to pay the 12.07% rate and then discover some way down the line (if there is a successful tribunal challenge) that they were wrong to do so, they will all face a nasty back payments bill. A bill they will have to meet out of their own coffers as they will of course no longer have recourse to the budgets from commissioners to pay for it.
That’s a very brave course of action, to dismiss the higher amount out of hand simply on the advice of PACT. I trust they know what they are doing.