Harpur Trust v Brazel – case analysis and advice to schools on the calculations of holiday pay
As we have previously reported, the Harpur Trust case (Harpur Trust v Brazel) was an appeal to the supreme court of a case regarding the calculation for holiday pay for part-year workers such as term time only (TTO) workers.
The supreme court has now agreed with the lower courts determinations in this case that the employee’s calculation for her holiday pay as a peripatetic music teacher had been incorrect. Mrs Brazel had only worked for part of the year, but successfully argued that the application of the standard 12.07% pro-rata holiday entitlement (which Acas formally recommended) was incorrect because it didn’t provide her with sufficient holiday pay.
Schools and academies have previously calculated atypical holiday pay on a pro-rata basis and 12.07% is the proportion that 5.6 weeks of annual leave bears to the total working year of 46.4 weeks.
Identify a ‘week’s pay’
The supreme court confirms that part-year workers (which includes TTO staff) are entitled to be paid holiday pay accrued in line with at least the statutory minimum 5.6 weeks under the Working Time Regulations even if they do not work all year round. The supreme court stated that all that needed to be done in that case to comply with the Working Time Regulations and Working Time Directive was for the school to identify a ‘week’s pay’ and multiply that figure by 5.6 weeks.
In the Harpur Trust case this meant that Ms Brazel received more holiday pay than her full-time colleagues because it took the 12.07% calculation to 17.5%. A week’s pay was with reference to the Employment Rights Act 1996 with a 12-week period being used at the time. Since the case first arose, the government advised that for all workers a longer reference period is to be used (52 weeks) insofar as this is possible and employers must ignore weeks where the worker is not paid. Employers can go back a total of 104 weeks to obtain the average earnings week’s earnings.
Only impacts part-year workers with an annual contract
This case only impacts part-year workers with an annual contract. Full-time and part-time workers who work all year round (52 weeks a year less any holiday) are likely to receive the correct statutory holiday.
We do not consider there will be lots of claims but it depends on the individual circumstances of each school or trust. The Harpur Trust case will typically pick up staff such as exam invigilators, sports coaches, music peris and possibly also cleaning staff. These are staff whose hours of work may differ, albeit they are on an all-year contract and therefore are entitled to 5.6 weeks holiday.
How to calculate the holiday pay for statutory purposes
As mentioned earlier the reference period for calculating a week’s pay for part year workers, including TTO staff, is now calculated by dividing the average earnings over a 52-week period before the calculation date.
You only calculate the weeks where there are earnings, so weeks not worked are essentially ignored. Employers can go back a total of 104 weeks to get the average earnings. This means that if a worker only has 20 worked weeks over the course of 104 weeks those are the weeks you use to obtain the average weekly earnings.
The formula to apply is the amount of a week’s pay (averaged) x 5.6 weeks = statutory holiday pay.
The way forward
- Check to see what methodology is used for TTO staff or other staff who have irregular hours. In essence, audit the potential claims that you may have to include from current and previous workers who are captured by this case.
- If you have not done so already and need to, amend the method of calculating holiday pay for part-year workers. This will reduce any liability for ongoing unpaid holiday entitlement. It is advisable to check with the local authority (LA) to see what has been agreed with the unions on this already. Then agree the new method you propose with the unions.
- If the method of calculating holiday entitlement derived from the LA – they may be liable for any claims that arise.
- If you are a trust and the method of calculation derived from the LA – check your commercial transfer agreement because the LA may have indemnified your trust in respect of any potential claims.
Claims likely to be small
If there are staff who are caught by this case and the method for calculating their holiday pay entitlement has been incorrect, it is arguably advisable to simply pay them because there is no defence now the case has been decided at the supreme court.
Additionally, the sums claimed are likely to be small – ie the difference between what you have already paid and the new calculation. Ms Brazel, for example, was already paid 12.07% which increased to 17.5% based on her circumstances. So she only received the difference in pay.
Limits on claims
There are time limits for presenting claims in the tribunal for unlawful deductions. This is three months from the last deduction. Such workers can only claim back up to two years of deductions from the point of issuing their claim. Workers who have left employment can present a breach of contract claim in the civil courts, with the limitation period being six years.
It is worth nothing that litigation costs are likely to be more than any potential claims and that is why settling any claims is potentially preferable.
We recommend legal advice is sought before agreeing to settle claims.
Any further recommendations?
Workers who are engaged short-term, say for the summer, will not be affected by this because their holiday entitlement will be pro-rata based on the months they are engaged for. The 5.6 weeks leave entitlement per year is therefore reduced accordingly.
It is only those staff who have all-year-round contracts but do not work consistent hours or weeks, such as those on zero hours contracts, who will be entitled to the full 5.6 weeks holiday even though they may not have worked many hours at all over the year.
This is important to note because for future reference it may be preferable to engage staff on contracts that are limited to the time frame you propose to engage them, to avoid a full year holiday entitlement.
It is also worth noting that this case relates to the amount of statutory holiday entitlement that workers are entitled to. Many staff in schools and trusts receive higher contractual entitlements and this can change from employer to employer.
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