The Supreme Court has confirmed in Harpur Trust v Brazel
that the amount of annual leave to which a part-year worker employed under a permanent contract is entitled must be calculated by reference to the average hours worked over the previous 52 weeks (disregarding any weeks not worked).
In a decision that will be of particular relevance in the education sector, but also industries who engage workers on permanent part year contacts, the Supreme Court decision marks the end of the road for the use of the 12.07% formula for calculating holiday for such workers.
The case concerned Ms Brazel, a music teacher employed on a permanent zero hours contract, who works variable hours during the school terms depending on how many pupils need music lessons. She had been paid for holidays three times a year, taking them in school holiday periods (when she did not work). The Trust calculated her holiday based on the hours Ms Brazel had worked at the end of each term, taking 12.07% of that figure and paying her the hourly rate for that number of hours. Ms Brazel claimed this resulted in her receiving less holiday (and holiday pay) than if the Trust used the average hours she had worked over the previous 12 weeks (a reference period which, from April 2020, increased to 52 weeks).
The 12.07% formula had long been thought of as an acceptable way of calculating holiday for individuals working irregular hours, it being the proportion that 5.6 weeks of annual leave bears to the total working year, and because using it meant those workers would not receive more holiday than a worker who worked regular hours.
The Supreme Court’s decision may leave these atypical workers receiving higher rates of holiday pay than workers with permanent hours, but it has been confirmed as the correct interpretation of the Working Time Regulations 1998.
Employers using part year workers will have to weigh up whether the potential increased costs in holiday pay is worth the flexibility, and manage any discontent from permanent hour workers (part time or full time) who may be resentful of the apparent unfairness in holiday entitlement.
If you would like to discuss the changes around holiday pay in more detail or you have any other enquiries in relation to the above article, please contact a member of the team.