The recent Judgment handed down by the UK Supreme Court has provided clarity on the calculation of holiday pay for part time workers working irregular hours. The dispute arose over the amount of holiday pay which was paid to an employee who worked part-time and only for part of the year as a result of the school holidays The decision n in Harpur Trust v Brazel [2022] UKSC 21 determined that a part-time worker is entitled to the same amount of annual leave in a working year as that of a full-time worker. The amount which they are to be paid for this leave should be calculated by the use of the Calendar Week Method in accordance with S224 Employment Rights Act 1996.
Legal Framework
Under the Working Time Regulations, a worker is entitled to a statutory minimum of 5.6 weeks of annual leave throughout their holiday year. For a full time employee, this is 28 days. Workers are entitled to be paid at the rate of a week’s pay for each week’s leave. The law also sets out a method for employers to use when calculating one week’s pay for those with irregular hours: holiday pay is calculated using a 52-week reference period, but only for weeks where the individual actually worked. Any week in which the employee did not work (and therefore was not paid) is ignored.
Facts of the Case
This case centred around a dispute brought by Mrs Brazel, a teacher employed by the Harpur Trust at Bedford Girls School. Mrs Brazel taught students how to play the saxophone and the clarinet and would often work different hours each week depending on how many pupils needed lessons. Her average working week consisted of between 10-15 hours, but some weeks this was much less. During the school holidays, Mrs Brazel did not teach any lessons and was not required to work. As a result, she was only paid for the hours she taught in term time. Mrs Brazel made a claim against the Harpur Trust for unlawful deduction of wages arising from periods between 1 January 2011 and June 2016. Mrs Brazel was contractually entitled to 5.6 weeks’ paid leave and took this in three instalments of 1.87 weeks in each school holiday.
The Harpur Trust had calculated Mrs Brazel’s holiday pay to a percentage method. They calculated how many hours Mrs Brazel had worked at the end of each term, took 12.07% of this figure and paid her the hourly rate for that number of hours. This 12.07% was intended to reflect the fact that the usual annual leave entitlement of 5.6 weeks is 12.07% of 46.4 weeks (52 weeks of the year minus the annual leave entitlement). This approach was previously recommended in the now withdrawn ACAS guidance.
The Decision
The Supreme Court upheld that a 52-week reference period should be used to calculate holiday pay and the Harpur Trust’s appeal was accordingly dismissed. This means that the 12/07% method can no longer be relied upon. This gives the opportunity for part-time workers to benefit more favourably than full-time workers who work throughout the year in respect of annual leave entitlement and holiday pay. This finding was found to be consistent with the wording of the of the law and that it was Parliament’s intention to include a means of calculating an average week’s pay in the Employment Rights Act 1996.
What does this mean for employers?
This case has wide ranging potential to impact a number of sectors, particularly those in education, construction, and industries who employ individuals throughout the year to work variable hours.
This case emphasises the need for employers to keep up to date with legal developments and ensure that they adhere to these. The Harpur Trust’s policies did not reflect the current position of the law.
Employers will want to consider the terms upon which they employ casual workers, and whether to use zero-hour contracts rather than permanent contracts or term time contracts.
We can assist with reviewing your policies and providing calculations to work out how much holiday pay a worker is entitled to.
If you are looking for employment law advice as you believe that your employer may have made deductions from your wages, or are a business owner and would like advice and/or assistance with how to calculate and manage worker’s annual leave and holiday pay entitlements, please do not hesitate to contact our specialist employment team at employment@curzongreen.co.uk or by telephone.
Please note that all information provided in this article has been provided as general guidance only and all references to the law are in force at the time of writing.