Calculation of Holiday entitlement for Term Time/Part year Workers
The Supreme Court decision handed down in the case of Harpur Trust v Brazel on 20th July 2022 has now provided clarity on how statutory leave entitlement for workers who are described as part year workers (i.e. workers who work for varying hours during only certain weeks of the year but have a continuing contract throughout that year), should be calculated.
Guidance on Holiday Calculations for Term Time / Part Year Workers:
The Supreme Court decision handed down in the case of Harpur Trust v Brazel on 20th July 2022 has now provided clarity on how statutory leave entitlement for workers who are described as part year workers (i.e. workers who work for varying hours during only certain weeks of the year but have a continuing contract throughout that year), should be calculated.
These workers without normal working hours, are entitled to 5.6 weeks leave each year. This entitlement applies regardless of the fact that there are some weeks in the year when they do not work.
For many employers, holiday pay calculation methods will need to change as the pro-rated 'percentage method' (proportionate accrual using 12.07%) has been rejected by the Supreme Court.
Holiday pay is calculated by averaging the pay received during the 12* weeks prior to the commencement of their leave. if there are weeks during the 12 week period where no pay was received, these weeks are disregarded and the employer must count back to include a total of 12 weeks in which pay was received.
Although the Supreme Court acknowledged there may be times when a part year worker receives a higher payment than a full time worker – this is compliant with the Part-time Workers (Prevention of Less Favourable Treatment) Regulations (Northern Ireland) 2000, as the part time worker is not being treated less favourably. There is no legislative provision to prevent part time workers from being treated more favourably.
* The reference period for the calculation of average pay was changed in GB law from 12 weeks to 52 weeks in April 2020. In Northern Ireland, the reference period remains at 12 weeks.
Part Time Workers
It is important to distinguish between Part Year Workers (on a continuous contract) and Part Time Workers. A part time worker is also entitled to 5.6 weeks leave in each holiday year but their entitlement in days or hours is calculated in proportion to an equivalent full time worker. For example, if a part time worker’s hours/days are half that of an equivalent full time worker, they will be entitled to half of a full time workers leave. If a full time worker is entitled to 28 days, the part time worker is entitled to 14 days. They should receive their normal pay – averaged over a 12 week reference period if their pay varies from week to week.
Casual Workers – not on a continuous contract
The method of calculating holidays for casual workers (those who work for short periods and not under a continuous contract), however, was not addressed in the Brazel case. Many employers have been using the 12.07% calculation for calculating holiday pay for these workers and this is no longer appropriate. Casual workers will be entitled to the appropriate proportion of 5.6 weeks leave, based on the period of time for which they are employed, to establish their leave entitlement. This should be paid at their normal pay or averaged using the 12 week reference period, if pay varies from week to week.
Not every holiday pay issue has been resolved by this Supreme Court decision and gaps and anomalies continue to exist with specialist legal advice needing to be sought.