Holiday pay for permanent workers who work part of the year

A recent Court of Appeal decision (Harpur Trust v Brazel) has shown how holiday pay must be calculated for term time, casual or seasonal workers on irregular hours, and zero hours workers. It could have implications for the construction industry where permanent staff only work part of the year.

In this case, the employee was a music teacher employed under a permanent zero hours contract, who worked irregular hours as they were dictated by pupil demand and she only worked term time. She was paid holiday pay based on the hours worked using a multiplier of 12.07%; the methodology suggested in ACAS Guidance where persons do not work regular patterns.

The Working Time Regulations say that all workers in the UK are entitled to 5.6 weeks’ leave each year and UNISON, representing the employee, argued that the teacher was entitled to the full 5.6 weeks’ holiday pay.

The Court of Appeal held that any employee who is under a permanent contract but who only works part of the year should receive the same holiday entitlement as an individual who works all year round, even though they would receive a higher rate of holiday pay.

The Court agreed that a person who works part of the week could be paid pro-rata holiday pay but said there was no legal basis for applying a pro-rata holiday entitlement to someone who works part of the year. The Court said holiday pay should be calculated as set out in the Employment Rights Act, which has prescribed methods depending on whether someone works set hours or an irregular work pattern.

The judgement potentially affects any employee or worker who has a permanent contract and is employed throughout the year but only works part of that year, or workers who work irregular hours where holiday pay has been calculated using the 12.07% (or similar) multiplier.

This case is being appealed so it is possible the decision will be overturned. In the meantime, it would be wise to keep it in mind and consider the drawbacks.

If you require further advice or guidance on this subject, please contact me or another member of our specialist Employment Law Team.