Holiday pay for term-time workers successfully challenged in Employment Appeal Tribunal

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23 March, 2018

In the recent case of Brazel v The Harpur Trust, the EAT upheld a music teacher's appeal challenging the approach taken to calculate her holiday pay.

Mrs Brazel worked at the Trust as a music teacher in term-time on a zero-hours contract. She was entitled to 5.6 weeks' annual leave and was required to take the holiday outside of term time. Holiday pay was calculated pro rata to the proportion of the year worked, paying it at 12.07% of a term's pay (i.e. using the percentage reflecting 5.6/46.4 weeks). Mrs Brazel complained that this meant that she was being underpaid during her holiday. The Trust relied on ACAS Guidance that supported the principle of paying 12.07% (5.6 weeks divided by 46.4 weeks) of annual hours for casual employees.

The Employment Tribunal found in favour of the Trust, holding that taking any other approach would give the Claimant an unfair windfall because she did not work for the standard working year (52 weeks, less 5.6 weeks' statutory leave). To do otherwise would result in her receiving approximately 17.5% annualised hours as holiday pay, which was more than a comparable full time employee.

On hearing the Claimant's appeal, the EAT held that there was no need to pro-rata holiday entitlement so as to ensure full time employees are not treated less favourably. Where an employee does not have standard working hours, the EAT clarified that the correct approach is to apply S.224 of the Employment Rights Act 1996, and work out her normal week's pay based on the pay received in the 12-week period prior to taking annual leave. Although this may produce abnormalities favouring employees such as Mrs Brazel, the EAT held that the legislation was clear.

The EAT noted that part-timers are entitled to be treated no less favourably than full-time workers. There is no scope for calculating holiday pay under the Working Time Regulations so as to avoid a 'windfall' for part-timers, or to avoid full-timers being treated less favourably. The EAT noted that this judgment would be of importance for some schools and teachers.

Although it can be difficult for employers to ascertain holiday pay for employees who do not work regular hours (whether part time employees, casual or zero hours staff), this case offers some clarity. It is now clear that the approach of simply paying 12.07% annualised hours as holiday may produce the wrong result for employees and leave employers exposed to claims for unlawful deductions from wages. The correct approach for employees who do not have regular hours of work is to work out the average pay in the 12-week period prior to the holiday being taken.

If you have employ staff who have irregular hours of work and have been working on the 12.07% principle, you should evaluate your approach to future holiday payments to ensure no underpayments are made going forward.

For more information in relation to employment rights in schools and educational institutions, please view our Education section. You can also contact our Education Group by telephone on 01772 220022. Alternatively, send your enquiry to us through our online contact form.

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