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Term-time workers: Capping holiday pay at 12.07% disadvantages part-time workers

In Brazel v The Harpur Trust, the Employment Appeal Tribunal (EAT) made it clear that part-time staff without normal working hours must have their holiday pay calculated by reference to their average earnings over the previous 12 weeks and not by applying a fixed formula.

The law

Under the Working Time Regulations, all workers are entitled to receive 5.6 weeks paid holiday per year, pro-rated for part-time staff.

Decisions of the Court of Justice of the European Union have made it very clear that workers are entitled to receive “normal pay” when they take paid holiday. Employers have to calculate holiday pay in accordance with provisions set out in the Employment Rights Act 1996, as interpreted by the Court of Justice of the European Union (CJEU), which broadly differentiate between workers with normal workings hours and those without normal workers, such as those engaged as casual workers.

Background

The Harpur Trust employed Ms Brazel on a zero hours contract to teach music. Her contract provided her with 5.6 weeks’ paid holiday, which had to be taken outside normal school holidays. There was no provision for this to be pro-rated.

Ms Brazel was required to submit monthly time sheets recording the number of hours she had worked, although she was only paid three times a year – at the end of April, August and December. Her pay varied from month to month.

She was required to take holiday at Easter, during the summer and at Christmas and her holiday pay was calculated by applying 12.07% of the term’s accrued hours at the end of each term. She challenged this and argued that adopting this calculation had resulted in an underpayment of £1,360.72 over a three year period. She said she was entitled to receive her “normal rate of pay” which should be calculated by averaging her pay over the previous 12 weeks.

The Trust argued that it had followed ACAS advice and that Ms Brazel’s holiday pay was accurate. She commenced proceedings in the employment tribunal.

The tribunal agreed with the Trust that payment of holiday pay should be capped at 12.07% of annualised hours. In the alternative, it said that as Ms Brazel was only working a maximum number of 32 weeks in a year and her arrangement was part-time, her entitlement to paid holiday should, accordingly, be pro-rated. Otherwise, it said that part-time workers would receive a financial “windfall” not available to full-time staff.

Ms Brazel appealed.

Decision

The EAT said that it was not appropriate to pro-rata Ms Brazel’s entitlement to holiday and holiday pay because:

  1. Her contract provided her with 5.6 weeks paid holiday.
  2. She worked irregular hours and, as such, her holiday pay should have been calculated by averaging her salary over the previous 12 weeks rather than applying a fixed formula
  3. As a part-time worker under the Working Time Regulations she was entitled to receive at least as much holiday as full-time workers (albeit this could have been pro-rated). Under the Part-Time Workers Regulations, she had to be treated no less favourably than full-time staff.

Tips for schools and colleges

It is common for staff engaged on term-time only or zero hours contracts to stipulate that holiday entitlement is accrued by reference to 12.07% of the hours worked over the year.

The 12.07% figure is 5.6 weeks’ holiday, divided by 46.4 weeks (being 52 weeks – 5.6 weeks). Generally, that is fine and works as a practical solution, particularly in circumstances where a worker does not have any regular pattern of working.

However, pay should be calculated separately. Workers without normal hours are entitled to be paid for holiday based on their previous 12 weeks’ pay. Pay for these purposes includes any shifts, uplifts, supplements etc. Any week where no pay is earned, for example, because they do not work, should be disregarded.

If you engage staff who work fewer days/weeks than comparable full-time staff, you must make sure that their entitlement to paid holiday reflects their actual working pattern, if this is known. If it is not, your contract should state that they are entitled to receive 5.6 weeks holiday pro-rated. 

Key Contact

Charlotte Sloan