Part-year workers entitled to paid full-time holiday

July 11, 2023 Didi Ogbo

Holiday entitlement for part-year workers explained

Almost a year ago, it was ruled in the landmark case of Harpur Trust v Brazel that permanent part-year workers are entitled to receive the same paid minimum holiday leave entitlement as a full-time or part-time worker. It had been common practice to calculate permanent part-year workers’ holiday entitlement on a pro-rata basis to reflect the amount of work they have undertaken. However, in this case it was held that this method is not appropriate to use for permanent part-year workers.

Organisations who previously calculated and continue to calculate holiday pay for part-year workers on a pro rata basis must now reconsider how to calculate holiday entitlement and are at risk of being faced with claims for unlawful deduction from wages in the Employment Tribunal. If like many, you still don’t quite understand what it means for you, as an employer, in practice, our Employment law solicitor Didi Ogbo has broken down the case and its impact on employers in today’s article.

What is a permanent part year worker?

To understand the implications of the case, it is important to note that permanent part-year workers are those who are employed on a permanent basis, but unlike full-time or part-time workers, only work during certain parts of the year while their contract continues during the parts of the year they are not working. A common example would be seasonal staff (such as football seasonal workers) or teachers who only work during term time.

What is the minimum holiday entitlement?

The Working Time Regulations 1998 (WTR) entitles most employees and workers to a statutory minimum of 5.6 weeks of paid holiday per year – this equates to 28 days holidays (20 days plus the usual 8 bank holidays in England and Wales) for those who work full time.

Quick facts

Ms Brazel was a music teacher who only worked during school term time under a zero-hours contract. She worked 10 to 15 hours a week for 32 weeks of the year and therefore week on week, her weekly pay varied. Her employer (Bedford Girls School by The Harpur Trust) calculated her holiday and holiday pay each term by taking 12.07% of the hours she worked over the previous term and paid Ms Brazel her hourly rate of pay for those hours. 12.07% reflects the number of weeks’ statutory holiday in a year (5.6) as a percentage of number of working weeks in a year and was the method Acas had suggested employers opt to calculate holiday pay for casual workers. This guidance has since been deleted in light of this case!

Ms Brazel challenged the method, arguing that it incorrectly and detrimentally calculated her holiday pay and she brought a claim for unlawful deduction from wages. Ms Brazel argued that her holiday pay should be calculated based on an average of her earnings over the previous 12 weeks (from April 2020 this reference period was increased to 52 weeks), which in turn would have resulted in her receiving a higher amount of holiday pay.

The Supreme Court rejected her employer’s appeal and found in her favour. It held that the amount of leave she was entitled to did not need to be pro-rated so that it was proportional to that of a full-time employee. According to the Supreme court, the right approach is that she was entitled to 5.6 weeks’ leave, regardless of her working pattern. The Court held that in these circumstances, workers should be paid their average weekly pay over the previous 52 weeks in which salary was payable and and the weeks that she did not work must be discounted for the purpose of calculating her entitlement (calendar week method).

Impact of the case

Employers should no longer calculate holiday pay for permanent part – year workers on a pro rata basis. Instead, and as referred to above, holiday pay should be calculated based on an average of a worker’s earnings over the previous 52 weeks and any weeks in which a worker has not worked should be discounted when calculating their entitlement. The Court’s calculation of holiday pay in these circumstances has caused some controversy, as the WTR does not contain a clear approach. Further, this method could produce excessive results meaning that part-year workers could receive proportionally more holiday entitlement than full- and part- time permanent employees, something which the Court acknowledged.

So what now?

If you are yet to change your approach when calculating holiday on a pro-rata basis for permanent part-year workers, we suggest that this is changed immediately, in line with the case, to reduce the risk of any claims made by workers. All workers should receive a minimum of 5.6 weeks of leave per year. Whilst payroll systems may be able to implement these changes, the responsibility to ensure payments are made correctly rests with you as an employer. If you have been calculating holiday pay incorrectly, you may owe employees compensation for underpayment of holiday pay or you may be at risk of unlawful deductions claims. Generally, unlawful deductions from wages claims must be brought during employment or within three months of the date of the deduction. If you receive any such claims you should consider the calculations which are presented and to avoid a successful claim, consider settlement if appropriate.

There is no doubt that the case law is complex. The Government has even held a consultation on the case which closed in March 2023. We will await the outcome of the consultation but in the meantime, we suggest you follow the steps above.

How can we assist?

If you have any queries surrounding the above case and the calculation of holiday or require bespoke employment law advice, feel free to get in touch by scheduling a discovery call with our employment law experts at Dragon Argent.