Is accrued and not taken holiday payable?

Nanny employed by family's company then transferred to father's name - TUPE? Holiday Pay?

Didn't find your answer?

Dear all

I have conflicting advice.

Nanny started working in March23 for a family and at that time it was easier to put her on the company payroll in Father's business. To cut a long story short, it was decided to transfer it to one of those nanny payroll bureaus this month, which meant a new PAYE scheme in Father's name - therefore a P45 issued from company payroll and passed to bureau.

The issues have come as to what happens to the holiday not taken by the nanny from march-august (she has taken none)? 50% of enquiries said no holiday pay to be paid as it is continuous employment and the other 50% say yes you must pay it as p45 issued and that employment ended.

But it's same family, same job, same child, same contract (apart from in name of father rather than father's co).

I have been going around in circles with this......

Anyone can help me?

Thank you! 

Sam

 

Replies (44)

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By Bobbo
18th Aug 2023 17:33

Based on admittedly little knowledge of the TUPE rules, I would side with the former 50% rather than the latter 50% as, as far as the employee is concerned, isn't the whole point of TUPE that the employment hasn't ended?

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Replying to Bobbo:
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By sammywitters
18th Aug 2023 18:03

Exactly agreed but there’s always that little doubt in one’s mind!

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By Tax Dragon
18th Aug 2023 17:33

Exactly 50%? So you've asked 2 people, right?

Only an accountant would refer to a person as 50%.

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Replying to Tax Dragon:
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By sammywitters
18th Aug 2023 18:02

4 people asked, 3 from same nanny bureau of which 2 said no holiday pay and one said yes (so internal conflicts there) plus another separate answer on forum saying yes to paying it.

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Replying to sammywitters:
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By Tax Dragon
18th Aug 2023 18:25

100% more than my guess.

And 25% of the people asked were a forum. So theirs would've been the right answer, surely?

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By Wanderer
18th Aug 2023 18:07

Sit back & think.
The nanny has had just the one job. It's the convenience of the family that she has been switched between payrolls.
Of course she gets full holiday entitlement.
Oh & if it's the statutory 28 days you don't just pay it. It gets paid AND she actually takes the holiday.

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Replying to Wanderer:
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By sammywitters
18th Aug 2023 18:14

I didn’t have doubt about the holiday entitlement, I would have assumed that would have carried over, to be taken by the end of the calendar year. It was paying the nanny all the accrued holiday up to 18/8

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Replying to sammywitters:
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By Wanderer
18th Aug 2023 18:17

No, you don't pay it, you carry forward the entitlement, and she takes it. There is no change in her contract, merely the PAYE scheme used.

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Replying to Wanderer:
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By C Graham
23rd Aug 2023 09:44

It depends on her contract of employment. If there is allowance to carry over a percentage of unused holiday to the next holiday period (year) then yes that's what happens. There is a statutory requirement to give 28 days paid holiday (or pro rata) but there is no statutory requirement to insist that it is used or can be carried over if not used. If the employer is the same then the employment payroll should not have raised a p45. They're simply passing the payroll processing but that does not affect his/her contractual rights. Unless a new contract was also issued.

The only times holiday is paid in lieu is when someone leaves employment and has untaken leave owed which cannot be taken during the notice period. Or go onto SMP. In the latter case all holiday accrued is carried over.

Generally there is no absolute right to insist unused holiday is carried forward. Holiday is based on take it or lose it.

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Replying to C Graham:
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By Wanderer
23rd Aug 2023 09:57

Err, except that's not the point we are addressing here at all.

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Replying to Wanderer:
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By C Graham
23rd Aug 2023 10:00

it is. It is about whether accrued holiday can be carried over when employment has not actually ended.

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Replying to C Graham:
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By Wanderer
23rd Aug 2023 10:03

No it isn't, you have made certain assertions based around holiday periods. This thread doesn't concern holiday periods.

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Replying to Wanderer:
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By C Graham
23rd Aug 2023 10:24

then it is an odd question. Someone in continuous employment gets statutory holiday - there's no transfer of the business or 'employer'. However there is a change to the contract because the company no longer employs her, she is now re-employed by the 'father' and should have a new contract with the new employer. All conditions of her contract simply transfer over because she would be within her rights to contest if they did not consult her. That includes accrued holiday.

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Replying to C Graham:
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By lionofludesch
23rd Aug 2023 10:38

C Graham wrote:

then it is an odd question.

You're never going to get a good answer to this because it's been done wrong in the first place. The lass should never have been employed by the company. But that's what the paperwork says and, short of unravelling the pay she's had and replacing it with pay from the parents, what you're left with is always going to be a fudge.

Either consult an employment lawyer or take the hit in the unlikely event that the nanny takes the matter to tribunal. This is not an accounting matter.

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Replying to lionofludesch:
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By C Graham
23rd Aug 2023 10:49

That's really the key issue here isn't it. Poor nanny being tossed around trying to get some holiday owed while family are not exactly doing things properly.

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Replying to C Graham:
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By lionofludesch
23rd Aug 2023 10:54

C Graham wrote:

That's really the key issue here isn't it. Poor nanny being tossed around trying to get some holiday owed while family are not exactly doing things properly.

There's no suggestion that the nanny is being in any way disadvantaged.

What's happening is a lot of accountants are masquerading as lawyers.

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Replying to C Graham:
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By Hugo Fair
23rd Aug 2023 11:09

The question isn't odd ... but, as Lion says (and I've tried to point out several times), the situation is - however ONLY because 'they' paid her the wrong way in the first place.

Based on the limited info provided, it should be impossible to declare as you have done that this is "continuous employment .. there's no transfer of the business or 'employer'."
It may not have been the intent, but they are where they've ended up!

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By Tax Dragon
18th Aug 2023 18:35

Ignoring my previous comments (as you should), it's generally ill-conceived to employ nannies via your company, as the nanny's salary is a cost to the company and the role the nanny performs is for the benefit of the director.

Got BIK and tax inefficiencies written all over it.

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Replying to Tax Dragon:
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By sammywitters
18th Aug 2023 19:13

Oh totally… I tried to resist it.. fell on deaf ears! At least now addressed.

Many thanks, appreciate your time.

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Replying to Tax Dragon:
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By Hugo Fair
18th Aug 2023 19:40

And that's just scratching the surface of the problem of employing the nanny via the company (assuming that this isn't its normal line of business) ... it almost certainly precludes the option of treating the new employment as a TUPE transfer.

[See https://www.gov.uk/transfers-takeovers for a simplistic view of HMRC's take on what is/isn't a valid transfer.]

And BTW, to all those who say that it is inherently not a new employment ... then how do you explain there being a new employer?

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Replying to Hugo Fair:
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By Tax Dragon
18th Aug 2023 19:50

Well is there a new employer at all? Was daddy really the employer all along (if so, where does TUPE come into it?) but funding it with his DLA (and just paying with the company payroll rather than creating his own)?

There may be more worms here than you could shake a can at (or whatever the saying is).

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Replying to Tax Dragon:
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By Hugo Fair
18th Aug 2023 20:04

Hmmm ... you have a point, particularly with regard to the quantity of whatever you choose to shake in your cans (mine are currently occupied by giant orange slugs - don't garden centres check anymore what they're donating to their purchasers of pricey potted shrubs?)

IF daddy really was the employer all along then TUPE is indeed irrelevant, but then it won't be just the DLA (and subsequent impacts) in play ... there's the need to reverse out the complete 'employment history' (created at HMRC via RTI under his company's PAYE scheme/ref) and then re-processing/submitting all those earlier payments but now under the correct refs (and 'late').

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Replying to Hugo Fair:
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By gillybean04
19th Aug 2023 10:42

Hugo, were you feeling unwell last night or had you enjoyed a tipple too many?

I would be very surprised if HMRC offered any view of when TUPE applies, since it is a matter of employment law which is the stomping ground for ACAS.

Which is possibly why the page directs you to check with ACAS if TUPE applies, not HMRC

Most unlike you to mix them up.

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Replying to gillybean04:
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By Hugo Fair
19th Aug 2023 11:56

Neither excuse available to me ... just age and laziness (if there's a difference!) ... in that so much of the rubbish that appears under GOV.UK has its origins with HMRC - and my fingers just went into auto-mode!

But my underlying point remains ... that if nanny's employment by "daddy's company" is outwith that company's normal business operations, then it's not going to be possible to treat the subsequent 'transfer' as falling under TUPE.

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Replying to Hugo Fair:
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By lionofludesch
19th Aug 2023 12:06

Hugo Fair wrote:

But my underlying point remains ... that if nanny's employment by "daddy's company" is outwith that company's normal business operations, then it's not going to be possible to treat the subsequent 'transfer' as falling under TUPE.

Is providing a director with a remuneration package no longer "normal business operations"?

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Replying to lionofludesch:
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By Hugo Fair
19th Aug 2023 14:14

That's not the point I was making ... although it raises a different one (in that if provision of nanny was part of daddy's remuneration package then I'd expect him to pay tax on the value - and for him, not the company, to handle her PAYE).

My point was that for a TUPE transfer to take place, there has to be either:
- "a Business transfer" or
- "a change in Service provision".

The former is where a business or part of a business moves from one employer to another ... and I can't see provision of nanny meeting those criteria.

The latter is where a service provided in-house (for example workplace catering) is awarded to a contractor, or a contract ends and is given to a new contractor, or a contract ends and the work is transferred in-house by the former customer ... and again I can't see provision of nanny meeting any of those criteria either.

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Replying to Tax Dragon:
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By C Graham
23rd Aug 2023 09:46

yep agree.

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By lionofludesch
19th Aug 2023 11:28

Just give the lass her holidays.

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By kiwilondon99
19th Aug 2023 12:41

did nanny join DaddyCo pension scheme ? and now .... its not just HPAY

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By Barbara G
19th Aug 2023 16:58

I would say, just continue her holiday entitlement on to the new PAYE scheme.

A P45 has been issued, but only to provide year to date figures for the new PAYE scheme. The nanny likely has little knowledge of the change in employer, so why pay her holiday entitlement as though she is leaving? To her knowledge nothing has changed. If you pay her holiday entitlement in lieu of actual time off, she is entitled to challenge the decision at a later date and ask to take the paid leave at a later date, even though she has already been paid for same. She is entitled to do this under working time regulations.

We had a client who moved employees to a new PAYE scheme and wanted the move to be a smooth as possible. The rights of employees were transferred under TUPE, no-one was paid holiday pay just because P45s were issued, payments and entitlements continued just as they had before.

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Replying to Barbara G:
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By Hugo Fair
19th Aug 2023 19:50

"I would say, just continue her holiday entitlement on to the new PAYE scheme" might be pragmatic, but (based on limited info provided by OP) not correct as TUPE is not applicable.

And, whilst I take your point that "pay her holiday entitlement in lieu of actual time off, she is entitled to challenge the decision at a later date and ask to take the paid leave at a later date, even though she has already been paid for same" ... this is *not* an automatic entitlement under WTR (because it is not a single employment).

The exact reverse is quite possible ... if you DON'T pay her holiday entitlement in lieu of actual time off, she is entitled to challenge the decision at a later date - as that was the only way in which she was entitled to be paid for not taking holiday (which might well be her preference).

So, unless OP is happy to rely on short-term pragmatism over longer-term risks, it would be a good idea to correct this mess properly (which unfortunately means seeking advice from an employment lawyer on the specifics of the case - not cheap, but that's what happens when people cut corners)!

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Replying to Hugo Fair:
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By Tax Dragon
19th Aug 2023 22:34

Hugo I don't know enough to dispute what you say about TUPE (though if the suggestion is to ask an employment lawyer to confirm the nanny is owed money in lieu of untaken holiday, can't they save the cost of the lawyer by making that payment?)

I do though challenge your tax statement: "if provision of nanny was part of daddy's remuneration package then I'd expect him to pay tax on the value - and for him, not the company, to handle her PAYE".

First bit is agreed - see my BIK comment, the BIK being the cost to the company (which could include nanny's salary, pension, benefits and employer national insurance).
Second bit re PAYE is simply wrong, imho. If nanny is a company employee, it's the company what operates PAYE.... which is why employer NIC is part of the cost which determines the quantum of the BIK!

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Replying to Tax Dragon:
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By Hugo Fair
19th Aug 2023 23:58

On your first point, the lawyer wouldn't as such be asked whether "the nanny is owed money in lieu of untaken holiday".
Although that may well be the consequence, the actual question revolves around the nature of nanny's employment - and therefore whether TUPE can or cannot be applied to her new employment.
If it can't, then pay in lieu of untaken leave is mandatory (on termination of current employment); whereas if it can, then pay in lieu is not allowed because the two employments are treated as a single one (with no termination).

On your second point ... whoops!
It felt wrong as I typed it, but guests arrived early and I hit 'post reply' without my usual double-check - mea culpa.

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By tom123
21st Aug 2023 08:09

From the employee perspective things carry on as normal. Can you imagine the situation if that was not the case? Employers would create new entities every year to cut their obligations.

Yes, from an HMRC perspective one employment ends and another starts, but in no way has the employee "started" a new job.

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Replying to tom123:
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By C Graham
23rd Aug 2023 09:52

If the contract of employment has remained the same then the question is why was a P45 issued at all? Just because the payroll service transferred does not mean the employment ended.

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Replying to C Graham:
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By tom123
23rd Aug 2023 10:00

I may have mis-read the question, but, usually for TUPE, the employer changes - so the old employer will need to issue a P45 to close that record.

Maybe that doesn't apply in these circumstances.

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Replying to tom123:
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By C Graham
23rd Aug 2023 10:06

agree but there does not appear to be any change of employer. She still works as a nanny for the family and OP says under the same contract.

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Replying to C Graham:
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By Hugo Fair
23rd Aug 2023 10:42

But "OP says under the same contract" isn't a fully accurate statement.

OP actually said: "same contract (apart from in name of father rather than father's co)".
And a contract from one party is distinct from a contract from another party, triggering a distinct/different employment unless TUPE applies (which we've established, in as much as is possible on a public forum, it doesn't).

The 'fact' that she continues to "work for" the same family is irrelevant in the sense that in itself it has no impact on who is employing her.
After all, I might get a cleaner from the ABC Co ... then cancel the contract and get a cleaner from the XYZ Co - who happen to send the same cleaner (but obviously under a different employment contract).

Unless there is proof that the initial contract of employment *was* with the family / father (although unwisely paid through company's payroll and fully re-charged to father), the default position of paying her under company's PAYE scheme is that she was employed by the company - as reported via RTI).
And, since that has now ceased, there must be a new contract in place - which means the old employment was terminated ...

But as usual we don't KNOW the precise details (merely what OP has said), so we should all stop banging the drum for any particular conclusion!

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Replying to C Graham:
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By Bobbo
23rd Aug 2023 11:00

Poster said this in the original post:

"But it's same family, same job, same child, same contract (apart from in name of father rather than father's co)."

So there would appear to be a change in employer from Father Limited to Father.

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Replying to Bobbo:
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By lionofludesch
23rd Aug 2023 11:11

Bobbo wrote:

So there would appear to be a change in employer from Father Limited to Father.

Yes. "Appear" is the word.

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Replying to Bobbo:
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By C Graham
23rd Aug 2023 11:14

agree on that - nanny is oblivious but there has actually been a change

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Replying to C Graham:
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By lionofludesch
23rd Aug 2023 11:23

She's only been working there four or five months. How much holiday pay has she accrued in that time ? A couple of weeks?

The risk is low here.

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Replying to lionofludesch:
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By C Graham
23rd Aug 2023 11:36

depends - she may have been entitled to more than stat 28 days. but she's halfway through annual entitlement. Generally when we've had to consult employment lawyers they do always push towards paying the employee where there is some doubt. But she must actually take the holiday. There is no right for her to be paid on top of salary for leave she decides not to take.

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By psimonparsons
23rd Aug 2023 10:01

As it’s continuous employment the holiday carries over as one continuous right. The P45 is a tax administrative document only in this case and does not reflect termination of employment - I would suggest.

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