Holiday pay for term time workers
The supreme court has upheld the decision of the employment appeal tribunal and court of appeal ruling in Harpur Trust v Brazel that holiday pay for part-year workers should be calculated using the averaging method over a period of 52 weeks, ignoring any weeks that have not been worked.
By way of background, Mrs Brazel was a clarinet and saxophone teacher and employed as a ‘visiting music teacher’. She did not have a set number of working hours and was paid monthly, being classified as a ‘worker’ under a zero-hours contract. As a worker, she was entitled to 5.6 weeks paid annual leave under the Working Time Regulations. Her holiday pay was calculated on a pro-rata basis to that of a full-time employee using a formula of 12.07%. Mrs Brazel argued that her holiday pay should have been calculated using her average earnings over a 12-week period.
Court of appeal
The claim progressed to the court of appeal which agreed with the previous judgment of the employment appeal tribunal that Mrs Brazel’s holiday pay should be calculated based on a 12-week average of hours worked. The court of appeal held that EU law did not require leave to be reduced pro rata. Further, it was not necessary to apply a pro rata principle to the accrual of leave under the Working Time Regulations.
Changes from April 2020
Note that from 6 April 2020, the holiday pay reference period used for determining a week’s pay when calculating holiday pay for workers with irregular hours, increased from 12 weeks to 52 weeks.
The supreme court ruling means that all workers in the UK will now receive the same minimum level of paid annual leave regardless of how many hours they work. This will impact those individuals working part of the year on permanent contracts who have previously had their holiday entitlement pro-rated to reflect the number of weeks they actually work each year.
How many of your members of staff will be affected?
We are currently awaiting further guidance to be issued on this important ruling before publishing further advice to clients as to the implications of the case. In the meantime, clients are advised to undertake an audit to determine how many members of staff will be affected by this decision. Schools should also ensure that they are using the 52 week reference period to calculate holiday pay. Schools can no longer use 12.07% to calculate holiday pay for part-year workers.
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