“Am I entitled to increased holiday pay?”
The answer might be “yes”, if you are a part-year or zero-hours worker.
- Part-year worker = engaged on a permanent contract for only part of the year, such as during term-time
- Zero-hours worker = engaged on a casual contract, usually for ‘piece work’ or ‘on call’ work
Up to 700,000 part-year and zero-hours workers could benefit from increased holiday pay following the Supreme Court judgment of a recent case, Harpur Trust v Brazel.
Workers in the education sector make up around 37% of the term-time and zero-hour workers impacted by this decision.
The background
Ms Brazel works as a music teacher during term-time but her contract extends throughout the year. She is paid hourly and works variable hours.
All workers are entitled to 5.6 weeks annual leave and her contract stipulates that this is to be taken during school holidays.
In 2011, Harpur Trust changed their method of calculating holiday pay
- Before: An average of the previous 12 weeks’ earnings multiplied by 5.6 weeks
- After: 12.07% of termly earnings
This worked out as less money for Ms Brazel, so she brought a claim against her employer for unlawful deduction from wages.
The case
Initially, Ms Brazel failed to win her case at the Employment Tribunal, but that decision was overturned by the Employment Appeal Tribunal and upheld at the Court of Appeal and the Supreme Court.
The Supreme Court noted that there’s nothing in the Part-Time Workers Regulations that prevents part-time workers from being treated more favourably than someone who works all year round.
The decision
Instead of using the ‘percentage method’ of adding 12.07% to earnings, employers should pay all part-year workers at least 5.6 weeks’ holiday pay, not pro-rated, irrespective of the time they spend working.
Weekly pay should be calculated as an average of the most recent 12 weeks of earnings, ignoring any weeks where earnings were zero (e.g. school holidays).
The correct method of calculation of weekly pay for a ‘part-year worker’ is set out in s224 Employment Rights Act 1996.
Exceptions?
The focus of the Supreme Court was on ensuring all workers receive at least the minimum entitlement under the Working Time Regulations 1998. They were less concerned about anyone who would benefit disproportionately.
For example, a sports coach or invigilator engaged by a school on a permanent contract who’s only required to work for 1-2 weeks each year would receive holiday pay equal to their full-time colleagues, even though it works out vastly greater than their wages.
Problems?
Government guidance suggests calculating the average hours worked in a ‘representative reference period’, but this is difficult for employers to calculate for new starters and anyone with highly irregular hours.
It’s also works out unfairly for people with different working patterns: a part-year employee working 30 hours in alternate weeks would earn twice as much holiday pay as an employee who works 15 hours every week, despite the fact they work the same total hours.
Consultation
To help resolve these issues, the Government has been through a period of consultation.
The goal is to:
- Ensure workers receive holiday pay that reflects the hours they have actually worked
- Provide a clearly defined method in calculating holiday entitlement
- Issue new legislation to provide clarity to workers and employers
One option is to exclude weeks not worked when calculating the 52-week reference period, rather than excluding them as per the Harpur Trust calculation. The total hours worked will then be multiplied by 12.07% to calculate the total holiday entitlement.
Individuals and organisations were invited to respond by 9 March 2023, with the Government’s response to be published “in due course”.
What this means to you
Until the consultation results in a change, the Harpur Trust v Brazel judgment remains binding law.
If your employer fails to to pay holiday pay accordingly, you can make a claim against them for unlawful deduction of wages.
We’re employment lawyers who represent employees, so we can help with that. Just give us a call.
Related reading
For more information on this subject, you might find our related articles useful:
- How much should my holiday pay be?
- Can my employer refuse my holiday request?
- Am I entitled to backdated holiday pay?
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