The recent case of Harpur Trust -v- Brazel has just concluded at the supreme court this week.  The topic is about the key principles on which holday pay for term-time, casual and part-year workers is calculated and may have significant implications for employers now the ruling decision is definitive.   The Harpur Trust’s appeal was dismissed confirming that employers may no longer pro-rate statutory holiday entitlement for part year / Term Time Only workers.

Traditionally statutory holiday pay has been given at a ‘rolled-up’ rate of 12.07% (using a calculation based on an individual working 52 weeks a year).  Durin an earlier tribunal Ms Brazel’s claim was that this resulted in her being underpaid as she only worked 33 weeks a year, and had the rate been applied differently she would have received the rate of 17.5%.  This was originally rejected by the employment tribunal,  who accepted the employer’s defense that a part time worker should have their holiday entitlement pro-rated to reflect the portion of the year that they work. However, the Employment Appeal Tribunal allowed Ms Brazel’s appeal against this decision, and confirmed that the calculation must have regard to a week’s pay, taking into account the number of weeks worked with no cap of annualised hours, as had been suggested by the initial Employment tribunal.”  The Court of Appeal confirmed that the calculation was straighforward, as set out in statute,  in that employers have to identify a week’s pay and multiply it by 5.6, regardless of whether or not this meant that part year or casual workers received a higher proportion of their annual earnings as holiday pay compared to full year workers.

The Supreme Court has now unanimously dismissed the trust’s appeal on the basis that there is no requirement, (and English law does not allow) for the leave of a part year worker to be pro-rated, in order to be proportional to a full year worker. This is despite the statutory method of calculation, which has regard to the actual number of weeks worked, leading to a part year worker receiving disproportionately more paid leave than full year workers. A more generous entitlement for part year workers was said to not infringe on either the Working Time Directive (or UK equivalent), or the Part-Time Workers Directive.

This decision could have wide-ranging consequences for seasonal workers,  schools, colleges, universities and related education institutions where a large percentage of workers are term time only, or have part year working patterns. As a result of the Supreme Court’s judgment, employers will need to consider the holiday pay of term time only, part year, and casual workers in relation to identification of a weeks’ pay x 5.6 (or equivalent if enhanced company holiday is in place).

Action

If you are an employer of term-time, part year or casual workers, then you should review the holiday pay and arrangements in force to ensure that they now correctly align with the Supreme Court’s decision – employees will be savvy to the press around this ruling and likely expect alignment.

You are also likely to need to assess any historic liability and decide whether or not to make any back payment to existing staff. Usually in cases where a worker brings an unlawful deduction from wages claim based on a series of deductions from an ongoing pattern of incorrect holiday payments, an employment tribunal can only look back at the two years preceding the unlawful deduction from wages claim being brought.

 

Case Law Summary

You can find a useful  press summary of the case here. 

The key rulings summarised are:

  • European law (the EU Working Time Directive which remains “retained EU law” following Brexit) does not prevent a state from making a more generous provision for holiday pay for part year workers relative to full year workers
  • The amount of leave to which a part–year worker under a permanent contract is entitled  under domestic law must not be, pro–rated to be proportional to that of a full–time worker (in effect part year/ TTO   are entitled to 5.6 weeks statutory leave per annum regardless of the number of weeks they have worked on –  equal to the 5.6 weeks statutory leave per annum full year workers are entitled to)
  • When calculating weeks’ pay for holiday purposes the definition of an average week’s pay in the Working Time Regulations 1996 Act should be used. This method  currently calculates holiday pay for part year workers basing it on average weekly pay during in a 52-week reference period ending with the start of the period of leave, ignoring any weeks where pay was not received.