The Supreme Court held in the landmark case of Harpur Trust v Brazel [2022] UKSC 21 that the 5.6 weeks' annual leave entitlement under the Working Time Regulations 1998 (WTR 1998) should not be reduced pro rata for "part-year workers" (those who are employed for the whole year but only work some weeks and not others).
The Facts
Mrs Brazel was a music teacher employed under a permanent contract on a zero hours basis. The Trust was not obliged to provide a fixed minimum amount of work and she was paid only for the amount of work carried out which was mainly during school term-time (the length of which varies from year to year). Additionally, she only worked part time and did not work at all during school holidays.
She was entitled to 5.6 weeks' paid annual leave (both under her contract and statute), which she was required to take during school holidays. In respect of her holiday pay, the Trust calculated Mrs Brazel's earnings at the end of each term and paid her 12.07% of that figure using the guidance as set out by ACAS at the time.
Mrs Brazel believed this to be an unfair calculation and brought a claim in the Employment Tribunal (ET) for unlawful deductions from wages in respect of holiday pay. She argued that her holiday entitlement should be paid according to section 224 of the Employment Rights Act 1996, namely at the level of her average earnings over the 12-week period immediately before holiday was taken. This approach would mean that as a term-time only employee, she would receive a higher percentage of annual earnings as holiday pay. The Tribunal dismissed Mrs Brazel's claim in the first instance and the matter was referred to the Employment Appeals Tribunal (EAT), the Court of Appeal (CA) and lastly the Supreme Court.
The Supreme Court noted that nothing in the Part-Time Workers Regulations prohibited part-time workers from being treated more favourably than someone working throughout the year. It was their view that she was entitled to receive the same holiday pay as full-time employees who work throughout the year. The number of hours actually worked should not therefore have had any bearing on her holiday pay.
So what does this mean?
Well firstly, it applies to all workers. In practice, the biggest impact is on hourly paid workers who have a permanent contract but, for whatever reason, have a number of unpaid non-working weeks during the leave year. In essence the greater the number of non-working weeks, the greater their holiday entitlement and therefore holiday pay, as this will be as a percentage of annual working time and earnings. There is now an automatic entitlement to 28 days (or 5.6 weeks) holiday entitlement per annum for every worker in the UK.
So, all employers must stop using the 12.07% calculation to determine holiday entitlement for part-year workers, if an employer continues to do so, then they run the risk of claims in the Employment Tribunal. Employers should also be aware that there is also the risk of claims being made for back-pay if part-year workers have been underpaid as a result of using the 12.07% calculation.
What next?
All employers who engage workers on permanent zero-hour, casual, or term-time only contracts need to consider how this decision impacts them and change their internal policies, procedures and practices accordingly. It may also be worth considering making any repayments to workers who have been underpaid if they have been paid holiday using the 12.07% entitlement to head off any potential liability going forward
To discuss this update or any of the issues that arise from it, please do not hesitate to contact Emma-Louise Hewitt e.hewitt@sydneymitchell.co.uk by email or on 0121 746 3300.
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