A recent ruling by the Supreme Court in the case of Harpur Trust v Brazel [2022] has held that the 5.6 weeks’ annual leave entitlement, as set out in the Working Time Regulations, should not be reduced pro rata for part-year workers. This includes individuals who are employed for the whole year but do not work consistently each week.

Background

The application of the statutory minimum of 5.6 weeks’ paid leave can be difficult to establish when dealing with workers who do not have normal working hours. The common approach has been to say that holiday entitlement accrues at a rate of 12.07% of the hours worked, known as the percentage method. This percentage is calculated on the basis that the standard working year is 46.4 weeks (being 52 weeks minus the 5.6 weeks’ statutory entitlement) and 5.6 weeks is 12.07% of 46.4 weeks.

Facts of the case

Mrs Brazel worked as a music teacher at a school run by the Harpur Trust under a permanent contract on a zero-hour basis. She was only paid for the work she carried out and mainly worked during school term-time. She was therefore a part-time worker in the sense that she did not work a full working week and also because she did not work during school holidays.

Under her contract and statute Mrs Brazel was entitled to 5.6 weeks paid annual leave which she had to take during school holidays. An agreement was made between the parties that three equal payments in respect of holiday would be made at the end of each term. Harpur calculated Mrs Brazel’s earnings at the end of each term and paid her 12.07% of that figure, using the percentage method.

Mrs Brazel initially brought a claim in the employment tribunal for deductions from wages in relation to her holiday pay as she argued that the percentage method was not relevant and that her holiday pay should instead be calculated at the level of her average earnings over the 12-week period immediately before the holiday was taken (known as the calendar week method). Under this calculation, she received a higher percentage of her annual earnings as holiday pay, and she claimed unlawful deductions from wages for the difference. Mrs Brazel also claimed that she had been subjected to less favourable treatment due to her part-time status.

The tribunal initially dismissed Mrs Brazel’s claims but she successfully appealed to the Employment Appeal Tribunal where it was held that there was no requirement in the Working Time Regulations to pro rate holiday pay for part-time workers and the Court of Appeal reached a similar decision. Harpur then appealed to the Supreme Court.

Judgment

The Supreme Court dismissed the appeal. The Harpur Trust argued that part-year worker’s leave must be pro-rated due to the “conformity principle” which requires compliance with retained EU law, which includes the EU Working Time Directive. Despite this, the Supreme Court held that European law does not prevent individual states from making a more generous provision and, as a result, the amount of leave that a part-year worker under a permanent contract is entitled to is not required to be, and under domestic law must not be, pro-rated.

The Harpur Trust also tried to put forward alternative methods for calculating holiday pay for part-year workers, but these were also rejected by the Supreme Court. This was partly due to the fact that they would involve complicated calculations requiring employers and worker to keep a detailed record of the hours they work, even if they are not paid an hourly rate.

What does this mean for part-year workers?

As a result of this ruling, part-year workers are entitled to 5.6 weeks holiday per year and the Supreme Court has confirmed that the correct method for calculating their holiday pay should be based on their average earnings over a 52-week period, regardless of whether there are weeks in which they have not worked, and not by reference to the hours worked. This may mean that some individuals receive a greater proportion of holiday pay than full-time workers but there are no legislative provisions which prevent this.

Lastly, it is important to note the difference between part-year and part-time workers as the holiday entitlement for the latter group will still translate into a proportion of a full-time equivalent’s entitlement.

If you are an employer or employee looking for advice, please do not hesitate to get in touch with Charlotte Braham at charlotte.braham@allanjanes.com or by phone on 01494 893529.