Government Consultation on Holiday Entitlement

Government Consultation on Holiday Entitlement/Pay for “Part-Year Workers”

The last few years have brought significant changes in the way that holiday entitlement and pay is calculated.

Earlier this year, the Supreme Court reached its verdict on the case of Brazel v Harpur Trust.

Brazel was a music teacher working variable hours per week during term time.

In 2011, Harpur Trust updated its method of calculating Brazel’s holiday pay, changing from the 5.6 weeks paid holiday calculation to the 12.07% method of working out holiday entitlement, in accordance with the guidance given by ACAS at that time.

Brazel disagreed with this change and brought a claim to the Employment Tribunal for underpayment of wages.

While Brazel’s claim was initially rejected, subsequent appeals to the EAT, Court of Appeal, and Supreme Court have all since ruled in support of Brazel’s claim.

It was determined that the 12.07% method of calculating holiday pay for part-year workers and permanent workers with irregular working patterns was not in line with the Working Time Regulations (WTR) 1998.

How should holidays for part-year workers be calculated?

For workers who fall into this category, they should be entitled to the full 5.6 weeks of annual leave a year.

Their holiday pay should be calculated by working out their average pay over the previous 52-week reference period.

If there is a week in which the worker was not paid, this would not be included in the calculation.

This may mean having to look back further to reach the full 52 weeks, but this shouldn’t exceed 104 weeks.

On reaching the average pay per week, this would then be multiplied by the 5.6 weeks’ leave entitlement to work out the holiday pay entitlement for the employee.

What’s new?

The Government has issued a consultation paper to address the issues arising from the Supreme Court’s judgment in this case as a result of Harpur Trust, part-year workers are entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year.

The Government wants to address this disparity to ensure that holiday pay and entitlement received by workers is proportionate to the time they spend working.

The proposal is to replace the 52 week reference period when weeks in which no remuneration is earned are ignored, with a 52 week reference period which includes weeks with no remuneration.

The consultation will try to understand the implications of the judgment and the proposal on different sectors and those with complex contractual arrangements.

The Government wants to ensure that any changes it considers do not have any adverse impacts on other parts of the legislation.