Harpur Trust v Brazel: Changes to Holiday Calculations
In a significant case for part-year workers, including term-time only, zero-hours and casual staff, the Supreme Court has confirmed that employers should not be pro-rating annual leave in line with the weeks in the year they work.
What do you need to know about Harpur Trust v Brazel?
The long-awaited outcome in Harpur Trust v Brazel has also caused a stir for holiday calculations, by rejecting the use of the “percentage method”, i.e. 12.07 percent of hours worked, in calculating variable hours holiday.
The original case involved a music teacher, employed on a permanent, zero hours, term time contract. Her hours varied in accordance with pupil demand and the ‘percentage method’ was used to calculate her annual leave entitlement by her employer. Brazel argued that this was incorrect, and as the teacher’s employer disagreed, a claim was raised.
A tribunal took place, where the teacher’s claim was dismissed, finding that the holiday pay calculation given to her by the school was in fact correct, as per the Working Time Regulations in 1998.
This resulted in the claimant appealing the decision to the Employment Appeal Tribunal (EAT). They ruled in her favour, stating that section 224 of the Employment Rights Act 1996 provided a simple method to calculate pay for irregular workers (i.e. over a 12 week reference period).
The employer then appealed to the Court of Appeal (CoA), arguing that reducing the claimants holiday entitlement was required to avoid unfair results and the potential for other part-year workers being entitled to holiday pay exceeding that of a full-time worker.
However, the CoA dismissed this, stating that the Working Time Directive only requires workers to accrue annual leave in proportion to the time they work, but is not relevant to the remuneration for that leave.
They acknowledged that the ruling could lead to odd results in ‘extreme cases’ but stated that the circumstances for this to arise (for example, an individual who only worked a few hours per year on a permanent contract) would be unusual.
The Supreme Court stated – “in short, the amount of leave to which a part-year worker under a permanent contract is entitled is not required by EU law to be, and under domestic law is not, prorated to that of a full-time worker.”
What does this mean for those who calculate holiday entitlement?
This change means that the previous method of using 12.07% of a worker’s hours is no longer appropriate, as it can leave some in a worse off position.
Now, holiday pay should be calculated based on the workers average earnings over the previous 52 working weeks.
All workers will be entitled to 5.6 weeks leave.
What remains the same?
The above noted changes do not impact part-time workers, only part-year workers.
Those who work part-time over the course of 52 weeks but for less hours or days than those in a full-time position should continue to have their holiday calculated on a pro-rata basis.
Fixed term employees are also unaffected, as their holiday should also continue to be calculated pro-rata for the duration of their contract.
If you need further clarification on the new rules for part year workers such as term time and zero hours staff or if you need further support on how to apply the “average method” please do get in touch.
Call Tara on 07983 936747 or email info@zesthr.co.uk