In the most recent case about the way holiday pay is calculated, of Brazel v The Harpur Trust, the Court of Appeal has ruled that holiday pay for permanent workers who only work part of the year cannot be pro-rated.
The Claimant was a music teacher, working only school term time. She was required to take her holiday outside of the school term and her employer paid her accrued holiday entitlement three times a year, at the end of each term. The Claimant's holiday entitlement was calculated by reference to 12.07% of the hours she worked. Whilst this is not a method of calculation prescribed by the Working Time Regulations 1998 (WTR), it is one regularly used by employers to calculate holiday entitlement of casual workers. The Claimant argued that her holiday pay was incorrectly calculated and should be calculated using the average of the 12-week period immediately preceding the holiday. This is as set out in the WTR.
The Employment Tribunal ruled that, in circumstances where an employee is on a permanent contract but only works part of the year, they are still entitled to 5.6 weeks of holiday, and this should be calculated using the average of the 12-week period immediately before the holiday. Using this calculation (rather than the 12.07% multiplier) gave the Claimant a greater amount of holiday entitlement and, in turn, pay.
The Respondent appealed on the grounds that they did not consider it to be equitable as such an approach would result in the Claimant receiving a higher proportion of her annual salary as holiday than that of a full-time worker. The Court of Appeal rejected this appeal.
This decision confirms the importance of complying with the WTR and getting your calculations right, rather than just working on the basis of assumptions. All employees who work irregular hours should have their holiday pay calculated based on the 12 week reference period, even where this causes a disparity as to the amount of holiday different employees will receive.
Originally published September 4, 2019
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