Supreme Court due to Provide Clarity on Holiday Pay Calculation for Workers with Irregular Hours
A Supreme Court judgment is being eagerly awaited by employers, where clarity is expected to be provided on how to approach calculating holiday pay for workers with irregular hours. This decision will not only impact those employers in the education sector but also those who engage workers who do not work the entire year under a zero-hours contract.
All workers are entitled to the legal minimum of 5.6 weeks holiday, or 28 days. For a full time employee, this leave equates to 12.07% of their working time. By applying 12.07% to part-time workers, this pro-rates their holiday entitlement based on their hours worked.
The case of Harpur Trust v Brazel
The case of Harpur Trust v Brazel was heard on 9 November 2021 and the Supreme Court published a full case preview on 1 April 2022.
The worker in the Harpur Trust v Brazel case was a music teacher engaged on a term-time only zero-hours contract, whose holiday pay was capped at 12.07% of her annualised hours. This method is standard industry practice for term-time workers and is very much the industry norm. It was argued that the holiday pay should be calculated based on the average weekly pay received 12-weeks immediately preceding the date the holiday is taken [please note, since 6 April 2020, after this case was heard, the reference period has increased from 12 weeks to 52 weeks].
By applying the traditional method and 12.07% calculation, it was argued that she was left worse off compared to the averaging method mentioned. However, if the averaging method is used, this will mean that her holiday pay would not be reduced to reflect part-year working, and as a result, a part-time worker may end up receiving substantially more holiday than a full time worker.
What is a ‘part-year’ employee?
The Court of Appeal used the term ‘part-year’ worker to describe those employed all year round, but who did not work the whole year, and held that there was no requirement to pro-rate the leave entitlement for part-time workers. The only requirement under the Working Time Regulations is to calculate a week’s pay and multiply it by 5.6, which is the method that should be applied to these workers and under these circumstances.
The Court of Appeal further considered part-time workers protection, who are not to be treated less favourably than full-time workers.
It was held that the holiday pay should be calculated using the average weekly earnings, during the 52-week period immediately preceding the date the holiday was taken, not the 12.07% calculation that was originally proposed.
The Trust in this case appealed to the Supreme Court:
- If they overturn the Court of Appeal’s decision, the 12.07% practice for irregular workers will be confirmed and can continue in line with current practice and ACAS Guidance; or
- If the decision is upheld by deciding that holiday should be calculated using the 52-week average method, it could open up the floodgates for term-time workers who will be seeking back pay for underpaid holiday, and the impact could be a significant cost to employers, particularly in the education sector.
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