A new ruling (Harpur Trust v Brazel) by the Supreme Court has favoured part-year workers and casual workers, opening the door to thousands of claims for compensation. The ruling says that these workers are entitled proportionally to the same holiday pay as full-time workers. It also found that the methods of calculating pro-rated annual leave for part-time workers ran contrary to the Working Time Regulations 1998.
The Supreme Court upheld a decision made by the Court of Appeal that a music teacher on a zero hours contract, Lesley Brazel, should receive an average week’s pay for each week of statutory leave from her employer, Harpur Trust.
Previously, employers would generally prorate holiday pay at 12.07% of wages for the hours worked. As a result of dismissing Harpur Trust’s claim to use the 12.07% standard, this opens the door for potentially hundreds of workers to claim for historical underpayment. However, it is unlikely to result in a change in the law. Nevertheless, from now on businesses should calculate holiday pay for part-time workers based on average earnings over 52 weeks, rather than by the hours they have worked.
Keep reading to learn more about the case.
What is a part year worker and what industries will this ruling affect?
Part-year workers are workers who, perhaps unsurprisingly, only work part of the year. They are often seasonal or temporary workers. There is no specified number of hours that a part year worker works per week, and this can vary depending on their role.
This decision will have a profound impact on businesses who employ workers on zero hours, term-time or on a seasonal basis. This primarily affects industries such as education, care and the healthcare sector. These industries often employ a proportionally higher number of temporary workers.
Harpur Trust v Brazel
Lesley Brazel is a music teacher who works at a school run by the Appellant, Harpur Trust. Ms Brazel works part time and is only paid for the hours she teaches during term time, working a variable number of hours per week. According to Brazel, this resulted in her receiving less holiday pay than she did before.
Through the Working Time Directive, the majority of UK workers are provided with four weeks per year. They are also granted 1.6 weeks through the Working Time Regulations 1998, totalling 5.6 weeks overall. The latter is granted through the UK’s implementation of the EU legislation, which defines a week’s pay as an employee’s average pay over 12 weeks before a period of leave.
In 2011, the Trust changed the way that it calculated her holiday pay in with the Acas guidance of the time. Before 2011, they would calculate Brazel’s pay for the 5.6 weeks by calculating her average week’s pay in accordance with the Employment Rights Act 1996 and multiplying it by 5.6. After 2011, they amended this by multiplying the hours Brazel worked by 12.07% and then multiplied this by the hourly rate of pay, in line with the government guidance.
Brazel subsequently brought a claim before the Employment Tribunal for underpayment of holiday pay through unlawful deductions of her wages. While the Employment Tribunal dismissed her claim, the Employment Appeal Tribunal allowed her appeal and held that the statutory regime required the use of the calendar week method. The Court of Appeal dismissed the appeal made by the Harpur Trust, as did the Supreme Court.
The Supreme Court’s judgement
The Supreme Court rejected the arguments made by the Trust in a unanimous verdict. They found that the model left employees with irregular part-time hours out of pocket.
The Harpur Trust accepted that Brazel is a worker, meaning that she is entitled to 5.6 weeks of paid annual leave, which she takes during the school holidays. However, because she isn’t required to work at all during the school holidays, there are more than 5.6 weeks each year where she doesn’t work at all.
Harpur Trust suggested two alternative methods of calculating holiday pay, making the argument that while Brazel would be better off under the Calendar Week Method proposed by the Supreme Court, other hypothetical workers would be worse off compared with Harpur Trust’s suggested methods.
The Supreme Court rejected this, putting forward three main points of contention with the proposed methods proposed by the Harpur Trust:
- The proposed methods are contrary to the Working Time Regulations, which determined that holiday pay should be calculated in accordance with a 12-week period which ignores the weeks in which the worker hasn’t received pay.
- The two methods would require employers and workers to keep detailed records of every hour worked, even if the worker wasn’t paid at an hourly rate. These complicated calculations were seen as problematic as a result.
- The Supreme Court rejected the idea put forward by Harpur Trust that the Calendar Week Method of calculating holiday pay is not appropriate. They decided that a worker in Brazel’s situation receiving holiday pay which represented a slightly higher proportion of their annual pay didn’t justify the Harpur Trust’s alternative method of revising the statutory scheme.
The judgement confirms the entitlement to 5.6 weeks holiday for full and part-time workers, without pro-rating.
Our thoughts
Following this outcome, employers should immediately look to rectify annual leave entitlements for part-year workers by moving from the 12.07% calculation method to the 5.6 weeks pay method. This calculates holiday pay by multiplying the average week’s pay for the part-year worker by 5.6.
It is important to clarify that 5.6 weeks does not necessarily equate to 28 days holiday, which is the amount a worker working five days a week would receive. For example, a part time worker who works three days a week is entitled to 16.8 days of holiday per year.
As mentioned previously, this will primarily impact those in the education and healthcare sectors, where seasonal and temporary work is more common.
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