Holiday pay for part-year workers

A study has reportedly found that most employers don’t fully understand how their business could be impacted by a Supreme Court decision on the correct method of calculating holiday pay. 

Harpur Trust v Brazel, which can be found at Citation (2022) UKSC21, was a long-running case about a music teacher employed under a permanent contract but who worked mainly during the school term. She was only paid for the work she carried out. At the end of each term, she was paid her holiday pay, calculated at 12.07% of her earnings for that term. This has been a commonly used calculation. The usual working year is 46.4 weeks, and a worker’s 5.6 weeks’ holiday entitlement per year is 12.07% of that. It is a way of pro-rating holiday pay for part-year workers like Mrs Brazel to that of full-time workers.

Mrs Brazel’s claim for unlawful deductions from wages was based on that percentage calculation being the wrong approach. She argued that holiday pay for someone with no normal working hours should be calculated according to earnings over the preceding 12 weeks.

The Supreme Court agreed, giving its judgment in July this year. ‘A week’s pay’ for the purposes of calculating Mrs Brazel’s holiday pay should be the average of pay earned in the previous 12 weeks (although this reference period increased from 12 to 52 from April 2020). Any weeks during which she didn’t work should be excluded.

As a result of this decision, workers like Mrs Brazel stand to receive in holiday pay a higher percentage of their yearly pay than someone who works 46.4 weeks. That more favourable treatment is not prohibited by the legislation which is concerned with not treating part-time workers less favourably.

What now?

People who don’t work regular hours are likely to question the basis on which their holiday pay is calculated and may bring claims of their own on the back of the Supreme Court’s decision. Some employers will already have sought advice on altering their holiday pay policies and procedures, and even the way in which they employ people, to factor in the outcome of the Brazel case. But for those that haven’t yet taken steps to understand what the decision means for their business, it’s wise to speak to an employment law specialist. Holiday pay is a notoriously knotty subject, and while the courts aim to provide firm rules and a clear steer, the correct application of rules to individual workplaces and workers can be tricky.  

To speak to us about holiday pay, contact Julian Cole on 01264 325805 or at jcole@bsandi.co.uk.