Employment Law: Supreme Court Judgement on Holiday Pay | August 2022
In this month's Employment Law update, we take a look at the case of Harpur Trust v Brazel, where the Supreme Court ruled that seasonal or part-year staff, who are retained all year round, will be entitled to the same holiday as their full-time counterparts without a pro-rata reduction.
The Court reached the decision by reviewing the wording in the Working Time Regulations 1998, which states the legal source of the right to 5.6 weeks’ minimum holiday per year. This legislation determined it does not provide any scope for the reduction of a worker’s holiday entitlement on the basis they only work for part of the year. This means the worker will still be entitled to 5.6 weeks’ leave, as those who work all year round are. It was acknowledged by the Court that this will favour those part-year workers compared with other employers/colleagues, however it was not enough to change the Court’s interpretation of the legislation.
Reviewing the same case, the Court examined the holiday pay entitlement of these types of workers. Historically, ACAS and many employers calculated holiday pay for these individuals based upon a percentage (12.07%) of hours worked. The figure was based on the 5.6 week leave entitlement is 12.07% of the working year of 46.4 weeks (52 weeks minus the 5.6 weeks of holiday). The Supreme Court advises this will no longer be legally compliant. With the correct method to calculate the individuals average weekly earnings over the previous 52 weeks (at the time the claim was brought the law was 12 weeks) and pay an average weekly rate of pay for each week of annual leave taken.
The individual case relates to Mrs Brazel who was a term-time only music teacher and who was employed by the school all year round. The hours worked by Mrs Brazel varied each working week depending upon the children at the school who wanted tutoring in Mrs Brazel’s chosen musical instruments. Mrs Brazel’s holidays were taken during the school holiday period as per her contract.
Harpur Trust, which the school is part of, calculated Mrs Brazel’s holiday pay based on the calculation of 12.07% of the hours worked during each term, for which she was then paid at the end of that term. It was demonstrated, in one term where Mrs Brazel worked 127 hours, she was paid 15.33 hours of holiday pay (12.07%) at her hourly rate of £29.50 and was therefore paid £452.20 worth of holiday pay.
The Supreme Court has, in its judgment, contended the following method: Mrs Brazel was entitled to be paid 5.6 weeks’ of pay in three instalments at the end of each term. For each instalment of 1.87 weeks the school should conduct a calculation of her previous 12 working weeks (as was Law at the time), ignoring any week she did not earn, and work out her average weekly pay. Using this approach and using the same school term as in the above example, Mrs Brazel’s total hours worked in the reference period were 149.5. Mrs Brazel was therefore paid £4,410.25 in the same 12-week period. Her average weekly pay was therefore £367.52 (£4,410.25 divided by 12), and she should have been paid holiday pay totalling £687.26 for that 1.87-week tranche of holiday. This is a difference in monetary amount of £235.06, which needed to be paid.
When it comes to reviewing any employee cases you may have in the workplace; it may demonstrate that employees have a financial underpayment, and these workers will have a right to claim for over a 2-year period. We would suggest checking your employees’ holiday and pay calculations, particularly those who work on a seasonal or part-year basis but are retained all year round.
Please don't hesitate to contact us here at cHRysos HR Solutions if you require any further guidance or support, or to discuss this case further.
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