Holiday pay for part-time staff – The Supreme Court rules that it should not be subject to pro-rata reductions
Over the last few years there has been steady case law challenging the established position on the calculation of holiday pay. Most recently the UK’s Supreme Court has made the decision that a music teacher on a zero hour’s contract should be entitled to the same holiday entitlement as her full-time colleagues.
Jas Dubb, Associate at The Wilkes Partnership considers the knock-on effects of the ruling under UK law and key points for employers to be mindful of when dealing with holiday entitlement and pay.
All workers in the U.K. are entitled to 5.6 weeks’ annual leave in each leave year (this is equivalent to 28 days for those who work 5 days a week). This is made up of the right under the Working Time Regulations 1998 (WTR) to a minimum of four weeks’ annual leave (20 days for full time employees) and the domestic right to an additional 1.6 weeks’ annual leave (8 days for full time employees) each year, which represents the number of public holidays in England and Wales in a year.
Background
Mrs Brazel (Brazel) a visiting music teacher run by the Harpur Trust (the Trust) was employed on a permanent basis under a zero hour contract. Brazel brought a case against the Trust after the Trust amended the way it calculated her holiday pay.
As set out in her contract and under statute, Brazel was entitled to 5.6 weeks paid annual leave, which was taken during school holidays. Due to only working during term time, Brazel was paid instead of taking holidays.
The Trust latterly changed the way it calculated the holiday entitlement for Brazel, electing to pay a rate of 12.07 % based on the wages she actually worked each term instead of paying the equivalent of 5.6 weeks. The outcome was that Brazel’s holiday entitlement left her out of pocket due to her variable hours. The Trust argued that Brazel’s holiday should be pro-rated in line with an equivalent full-time employee.
However, the Employment Appeal Tribunal allowed Mrs Brazel’s appeal, holding that there was no provisions in the WTR to pro-rate holiday pay for part-year workers and that holiday entitlement therefore should not have been capped. The Court of Appeal reached a similar decision followed by the Supreme Court ruling.
Jas Dubb explains that “This case will have an impact on employers going forward and could open the floodgates to claims by other part-year permanent staff. Businesses must be reminded to ensure that members of staff receive their holiday entitlement in line with these new guidelines,meaning that annual leave taken by someone who works less than a full year can no longer be pro-rated to that of a colleague employed all year round.
“It is also essential that all businesses review their holiday policies to ensure they follow the rules in respect of recognising the correct holiday entitlement to prevent claims in the future.”
If you would like to discuss any issue or query arising from this update please contact Jas Dubb or your usual contact in the Employment team. Alternatively, email us at [email protected].