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Charlotte Farrell from Paris Smith LLP details what the recent Supreme Court ruling means for term-time workers.
Holiday entitlements and pay for those who don’t work regular hours, particularly those who work term time only or on a zero hours basis, is a very tricky topic.
The case that was recently heard of Harpur Trust v Brazel has brought this into sharp focus – this is the Supreme Court case which was announced on 20th July 2022. Effectively, the judgement confirms that employees who only work for part of the year, but permanently, are entitled to the same holiday allowance as those who work throughout the year. Under the Working Time Regulations, employees are entitled to 5.6 weeks’ paid annual leave and this case confirms that this should apply regardless of how many weeks a year a person works.
In the Harpur Trust v Brazel case, the employee worked term time but on varying hours during the weeks she worked. Given the irregular nature of her working hours, the Harpur Trust argued that the annual leave for an employee who works part of the year must be pro-rated to take account of the weeks not worked. The Trust further alleged that it was easiest to calculate holiday entitlement that accrues as hours are worked. 12.07% is the proportion that 5.6 weeks of annual leave equates to throughout the year, and so the Trust argued that the employee was entitled to 12.07% of her pay for the term as holiday pay – this is a system and calculation used by a lot of employers.
However, the Courts don’t agree. As a result of this case, annual leave for part-year employees is not to be pro-rata’d. The 12.07% rate to calculate holiday pay shouldn’t be used either. To calculate holiday pay employers must use the “Calendar Week Method”. Employers must calculate the average pay received during the 52-week period prior to the employee taking the annual leave, ignoring weeks where the employee did not work and use that weekly pay figure to calculate the leave.
As an aside, it is fine for employers to pay an “annualised amount” instead of paying for holiday based on when an employee takes it, for example, taking someone’s salary, adding the 5.6 weeks holiday amount and then paying 1/12 of the full amount each month to avoid lower payments in the summer. This isn’t the same as pro-rata’ing the payment.
*Charlotte Farrell is an Associate Solicitor at Paris Smith in Southampton.