Supreme Court has ruled holiday pay for part-year staff should not be pro-rated.
The Supreme Court has ruled in the case of The Harpur Trust v Brazel, that employees that only work for part of the year, such as term-time workers, are entitled to the same holiday pay as colleagues working all year.
This judgment will have serious financial implications for employers with people working part of the year on permanent contracts especially those that are in the education sector. Workers on part-year could be entitled to back pay following this ruling.
In this case, Ms Brazel was a music teacher who worked at a school during term time. She believed her holiday pay should be calculated using her average earning over a 12 week period and not pro-rated.
She claimed to have been at a loss when the school she worked at changed the way in which her holiday pay was calculated in 2012. The Trust calculated her earnings by taking her earnings at the end of each term and taking 12.07% of that figure and then took her hourly rate for that number of hours as holiday pay (12.07% is the proportion that 5.6 weeks of annual leave bears to the total working year of 46.4 weeks). This method was widely used and was recommended in ACAS guidance but has since been amended.
Ms Brazel argued that this was method was incorrect as it did not comply with the working time regulations. She stated that holiday pay should be calculated by taking the average weekly pay for the 12 weeks prior to the calculation date and multiplying it by 5.6.
The case was dismissed by an employment tribunal in 2016 stating that the test the school had applied was the correct method of working out holiday pay. This was however overturned by the Employment Appeal Tribunal which ruled in Ms Brazel’s favour.
The Trust appealed the decision and went to the Court of Appeal in 2019 where it was found that the working time regulations did not need leave for term-time workers to be reduced pro rata. It was found that holiday pay should be calculated using their average earning over a 12 week period.
The Supreme Court has also ruled in Ms Brazel’s favour and found that she should receive the same holiday pay as staff who work all year.
The Supreme Court found many problems with the Harper’s Trust’s proposed calculation methods, stating that they contradicted the method set out in the working time regulations. These methods would require employers to keep detailed records of every hour worked even if employees were not paid at an hourly rate.
This will remain a complicated area for employers. The ruling may seem illogical and unfair to many, with employers finding it difficult to explain to their full-year workers why a colleague who works only part of the year is entitled to the same holiday entitlement. Employers will need to manage any friction proactively and with sensitivity.
If you want to discuss any of the issues raised in this Blog, Vajiha Ali from our employment team would be happy to help and you can contact her on firstname.lastname@example.org or speak to her on 01955 604188.