Calculation of annual leave entitlement for part-year workers – the final judgment

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A judgment handed down by the Supreme Court could have a significant impact on educational establishments employing people on zero-hour and term-time-only contracts.

In the case of The Harpur Trust v Brazel [2022] UKSC 21, Mrs Brazel was engaged by The Harpur Trust on zero hours, term time only contract. She did not work every week or full time.  See our previous article for details of the background to this claim.

Calculation of holiday pay entitlement for part-year staff

The Supreme Court has dismissed The Harpur Trust’s appeal and agreed with the Court of Appeal that employers must identify a week’s pay for the purposes of calculating holiday entitlement, in accordance with section 224 of the Employment Rights Act 1996.  The calculation must be made by using the relevant reference period (which for Mrs Brazel was 12 weeks) and ignoring any weeks where the worker received no remuneration.

In accordance with s.224(3) Employment Rights Act 1996, where there are weeks within the relevant reference period within which the worker receives no pay, the reference period should be extended to an earlier time period to bring up the number of paid weeks within the reference period.

The Supreme Court’s reference to a 12-week reference period was based on the law which applied when Mrs Brazel was engaged (her claim related to the period from January 2011 – June 2016). The relevant reference period, however, increased on 6 April 2020 and is now 52 weeks.

The Supreme Court warned that the alternative methods to calculate holidays that The Harpur Trust proposed would be unduly complex for employers, but also that there was nothing within statutory language to permit these alternative calculation methods.

The impact of this finding is that workers such as Mrs Brazel will receive a higher proportion of holiday pay when compared to full-time and part-time workers, but the Supreme Court found that this concept was not so absurd so as to justify the wholesale revision of the statutory scheme, as The Harpur Trust’s methods of calculation would require.

How to calculate holiday pay for part-year workers

The Supreme Court’s ruling is final and the binding precedent on this matter. Organisations engaging with workers on a similar basis to Mrs Brazel, now need to ensure that holiday pay is calculated on the basis of a 52-week reference period, ignoring any time not worked.

If you would like any further advice or support on the calculation of holiday pay for workers, please contact Jill Donabie on 0191 211 7933 or via [email protected].