Holiday pay changes incoming.

TL:DR

Holiday pay rules are changing, after a landmark case at the Court of Appeal. Ms Brazel, a visiting music teacher at Bedford Girls School, was employed by the Brazel trust on a zero-hours contract. She argued that she lost out, after the school changed the way it calculated holiday pay.

The case went all the way to the Court Of Appeal, and the outcome is that permanent employees who work irregular hours should have their holiday pay calculated using their average earnings over a 12-week period - instead of having it pro-rated.

The issue

Whether a worker’s right to paid annual leave is accumulated according to the working pattern of the worker and/or is pro-rated.

Harpur trust runs the school, where Ms. Brazel was a visiting music teacher. She was engaged on a zero-hours contract to work during term times, and didn’t work full-time, or for the whole year. She received holiday period at three times during the school year.

In 2011, the school changed how it calculated this holiday pay, with the result being less favourable to Ms. Brazel. She then brought proceedings in 2015 before the Employment Tribunal, which decided against her. She followed up with an appeal to the Employment Appeals Tribunal, where she was successful.

ACAS guidance, or Working Time Regulations?

Her contract entitled her to the full-time equivalent of 5.6 weeks’ annual leave, which had to be taken during school holidays.

ACAS guidance - the percentage method:
The school calculated her holiday pay at 12.07% of hours worked in a term (12.07% being reached by dividing 5.6 (full-time equivalent) by 46.4 (the total number of working weeks in a year). This was then paid in three instalments, at the end of each term, relying on the relevant ACAS guidance – the percentage method (which has since been rewritten).

WTR - the calendar week method
Ms Brazel put forward that her holiday pay should instead have been calculated using her average weekly earnings over the 12-week period immediately before her holiday was taken… As per WTR, reg. 16 and s. 221-224 of the Employment Rights Act 1996) – often called the calendar week method.

The legal arguments on both sides were highly detailed, but the Court of Appeal provided this summary:

'The WTR do not provide for the kind of pro-rating for which the school argues and which underlies the application of the 12.07% formula in the case of a part-year worker. The exercise required by reg. 16 and the incorporated provisions of the 1996 Act is straightforward and should be followed’.

So, where to next?

It’s likely employment contracts, and terms of engagement between end hirers, agencies and employment businesses will be up for a few tweaks. This will ensure everyone in the supply chain is compliant, and protected, and that candidates are getting the correct holiday pay, as per the latest legislation.

Whether you rely on the services of full time, part time, or zero hours workers… And whatever industry or sector you’re in, we’ve got you covered. Talk to your granite team today to learn more.