Opinion

Have you been calculating holiday pay for your “irregular workers” incorrectly?

27th August 2019

Have you been calculating holiday pay for your “irregular workers” incorrectly?

The Court of Appeal has recently considered whether the holiday entitlement of a part-time, part-year worker should be pro-rated. The Employer in this case had been following ACAS guidance on calculating holiday pay and entitlement for casual workers but the Court of Appeal held that this approach was incorrect.

The case of Harpur Trust v Brazel involved a visiting music teacher (Mrs Brazel) who was employed by Harpur Trust (the Trust) who ran the school which Mrs Brazel worked at. Mrs Brazel was employed under a permanent contract on a zero hour basis. She was only paid for the hours she worked and the Trust were not obliged to provide a fixed minimum amount of work. The work which Mrs Brazel did undertake was mainly completed during the school term-time.

Mrs Brazel queried whether her holiday entitlement was being calculated correctly. The Trust had been calculating Mrs Brazel’s entitlement by following the ACAS guidance booklet for calculating holidays for casual workers. This involved pro-rating the holiday payment based on the number of weeks Mrs Brazel actually worked rather than a standard employee’s 46.4 working weeks (52 weeks less 5.6 weeks statutory leave). Mrs Brazel, however, argued that her holiday entitlement should not be pro-rated.

The Court of Appeal considered this case and held that Mrs Brazel was not a casual worker as she was on a permanent contract. Instead, she was deemed to be a “part-year” worker, meaning someone that does not work a full working week nor work for large parts of the year. Therefore they had to consider whether her holiday entitlement should be reduced on this basis.

The Court of Appeal held that the Working Time Regulations did not provide for the pro-rating that the Trust was using. Further, it was held that there was no requirement under EU law for there to be a pro-rata entitlement for part-year workers to that of full-year workers.

It was held that neither domestic nor EU law required part-year workers to have their holiday entitlement pro-rated. Therefore, Mrs Brazel was entitled to have her holiday entitlement calculated on the same basis as a full-time worker with reference to 5.6 weeks holiday per year. This was decided irrespective of the fact that she often worked around 32 weeks a year and would lead to her holiday pay constituting a higher percentage of her annual salary than a full-year worker who would usually work 46.4 weeks a year.

The Court of Appeal agreed with Mrs Brazel’s argument that her holiday entitlement should be calculated using her average pay in the 12 week period prior to the holiday being taken.

Employer Considerations

The Court of Appeal emphasised in this case that this only applies to part-year workers on permanent contracts. While this case focussed on a term-time worker, any part-year workers, such as those on a zero-hour contract, may have claims for unpaid holiday pay if it has been calculated in accordance with the Trust’s method. This is a complex area of law so please contact a member of the team if you require any assistance with the calculation of holiday entitlement for your workers.

 

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