Employers Could Find They have Underpaid Staff Millions

On 9 November, the Supreme Court begins hearing the employer’s appeal in a case where the court will have to decide if a worker’s right to paid annual leave is accumulated according to their working pattern and/or is pro-rated.

Lawyers at Irwin Mitchell say that Harper Trust v Brazel has the potential to impact many employers, particularly in the education sector, who engage staff on term-time only contracts.

Mrs Brazel was employed by Harpur Trust on a zero hours contract to teach music. Her contract provided 5.6 weeks’ paid holiday, which had to be taken outside normal school holidays.

She worked different hours each week and was paid monthly on the basis of an agreed hourly rate applied to the hours worked in the previous month. The length of the school terms varied from year to year, from between 32 and 35 weeks.

The Trust argued it could pro-rate her holiday entitlement (and pay) to reflect the fact that she worked fewer weeks per year than comparable full time staff.

Ms Brazel brought proceedings, arguing that this was in breach of the Working Time Regulations and Part-time workers (Prevention of Less Favourable Treatment) Regulations.

Mrs Brazel succeeded on appeal but the Trust went to the Court of Appeal, which concluded that workers engaged on permanent part-year contracts must receive at least 5.6 weeks holiday. This could not be pro-rated, because the Working Time Regulations 1998 don't include a pro-rata principle in these circumstances.

Expert Opinion

“The unions have been actively pursuing holiday claims on behalf of term-time only staff, so many interested parties will be watching the outcome of this case closely.

"In 2018, Unison helped 5,000 term-time staff employed by Greenwich Council receive compensation for unpaid holiday, amounting to over £3.7 million and have previously intervened in this case because the principles involve affect hundreds of thousands of other workers.

“It’s not unusual for employers to pro-rate holiday entitlement to reflect the number of weeks staff work each year (usually 39, compared to 46.5 weeks for a full-time employee) and, as the law currently stands and depending on the outcome of this case, they may have underpaid staff.” Glenn Hayes - Partner & National Head of Employment Law