On 20th July 2022, the Supreme Court handed down it’s long-awaited decision on the Harpur Trust v Brazel case regarding the correct calculation of annual leave and holiday pay for employees with irregular working patterns.
Upholding the Court of Appeal and the decision of the Employment Appeal Tribunal (EAT), the Supreme Court ruled that employees on permanent contracts who only work for part of the year, should receive the same statutory holiday entitlement as employees who work the full year.
This means that the holiday entitlement of a permanent employee who works only part of the year should not be pro-rated to that of a full year worker. Part-year workers are entitled to the statutory 5.6 weeks' holiday and pay per year calculated in line with the provisions under the Working Time Regulations 1998 (WTR) using the “Calendar Week Method” and not the widely adopted 12.07% percentage method. Even though, in applying the WTR, this may result in part-year workers receiving a proportionately greater amount of leave than a full-time worker.
What is the Calendar Week Method?
The “Calendar Week Method”, is the name the Supreme Court referred to the method of calculating holiday pay for a permanent employee with irregular working patterns who only receive pay during the periods that they work and not during their nonworking periods. In such cases, the employer should apply a 52-week holiday pay reference period to calculate the correct amount of holiday pay. The reference period should ignore any whole weeks in which no pay was received, and count only weeks in which pay, however minimal, was earned.
What does this mean for schools and academy trusts?
The practice of calculating holiday pay on a pro-rata basis is common practice across the education sector and often implemented by local authorities.
Schools and Academy Trusts must review their current arrangements in place for calculating holiday leave and pay entitlements for part-year and irregular hour workers to ensure that they are consistent with the Supreme Court decision.
Schools and Academy Trusts should consider any historic liability arising from workers who work part year or irregular hours under permanent contracts of employment. An unlawful deduction from wages claim must be presented within 3 months from the date of the last underpayment, and a Tribunal can usually only order an employer to repay any unlawful deductions going back 2 years.
Schools and Academy trust should consider whether it may be appropriate for workers to be engaged on fixed terms contracts or whether it would be easier to use an Education Recruitment Agency to engage with workers on a contracts for services which would come to an end after each assignment, with no continuity in-between and therefore holiday pay can would be calculated using the percentage method.
How can Flourish help your school?
If you nominate a candidate to Flourish, who you wish to work with on a part time, irregular basis; we will engage them on a contract for services and charge you a reduced rate, as well as giving you a free supply day – saving you money and taking away any risk for your school over miscalculation of holiday pay.
Call our team on 0121 4233557 to find out more.
Please note that the information included in the article above is our opinion and is not legal advice.