The issue of holiday pay entitlement and calculations has caused headaches for employers and employment lawyers for several years. The latest matter to come before the Supreme Court relates to the method of calculating holiday pay for term time only workers, e.g. those working in schools for a particular number of weeks per year.
The case of Harper Trust v Brazel involved a music teacher who worked during term time only but whose zero hours contract continued all year long. Ms Brazel worked variable hours during term time and was hourly paid. Her contract required that annual leave was taken during school holiday periods.
Prior to 2011, the school calculated Ms Brazel’s holiday pay with reference to her average earnings during the previous 12 weeks multiplied by 5.6 weeks (the minimum holiday entitlement for all workers). However, in 2011 the school changed its method of calculation for holiday pay to 12.07% of earnings received during term time.
This resulted in Ms Brazel receiving less holiday pay than she had previously and she brought a claim to the employment tribunal for unlawful deduction of wages.
While Ms Brazel initially lost her claim in the employment tribunal, she went on to win this following a number of appeals, ultimately to the Supreme Court.
The Supreme Court held that the correct method for calculating holiday pay in cases of “part year” workers is set out in the Employment Rights Act 1996, which states that it should be with reference to the previous 12 weeks earnings ignoring any weeks when the employee didn’t earn anything, i.e. in school holidays. In addition, it was found that there was nothing in the Part-Time Workers Regulations which prevented “part year” workers from being treated more favourably in comparison to somebody working all year round.
Therefore the correct method of calculating Ms Brazel’s holiday pay was to look at her average earnings for the 12 previous weeks, ignoring any periods when she earned nothing.
This Judgment, particularly as it was delivered by the Supreme Court will have a significant impact on the calculation of holiday pay for those who only work for part of a year. It is likely that many education establishments have adopted the widely used “12.07 % calculation” and this will now need to be considered and changed moving forward.
Another important point to note is that this is unlikely to be limited to schools as many employers engage people on zero hour contracts to work only part of a year and currently calculate their holiday pay using the “12.07% method”.
Going forward, contracts will need to be redrafted and calculations for holiday pay will need to be updated. Whether or not this Judgment might result in an influx of claims for underpaid holiday pay remains to be seen.
If you have any queries please do not hesitate to contact Nicola Clarke of the Glaisyers Employment Team: email@example.com