Holiday Pay: What’s Changing?
Holiday pay is a notoriously difficult subject, meaning it’s also a popular subject that our clients often understandably need help with. The government have (finally!) addressed this, and a consultation has been opened – we don’t want to speak too soon, but will hopefully mean simplification of the process is coming!
Back in July 2022, it was confirmed by the Supreme Court that workers who only work part of the year should receive 5.6 weeks’ statutory holiday pay (Harpur Trust v Brazel), meaning that if any worker has a continuing contract throughout the year, despite only working certain periods (e.g. term-time workers) still have to have their holiday pay calculated the same as full-time employees.
The consultation:
- runs from 12th January-9th March 2023 and has come to fruition to ensure holiday pay and entitlement is directly proportionate to the time an individual spends working
- proposes introducing a 52-week holiday entitlement reference period, which would bring calculations in line with entitlements received by part-time workers who work the same number of hours across the year (This would include weeks in which workers did not work, such as teaching assistants who only work during term time)
- including unworked weeks would create an incentive for employers to give employees only a small number of hours a week, rather than none at all
- plans to simplify how entitlement is calculated, legalising the method whereby employers work out 12.07% of total hours worked across working and non-working weeks
- asks Employers how they currently calculate entitlement and whether implementing the suggested methods would work.
The debate around changing holiday pay calculation has sparked from the aforementioned case of a visiting music teacher at Harpur Trust, Ms Brazel, who worked during term-time on a zero-hours contract. Her hours were variable from week to week and she was only paid for the hours she taught.
The amount of holiday she accrued was determined by the number of hours she worked, and the Trust pro-rata’d the 5.6 weeks’ entitlement to calculate her holiday entitlement. Ms Brazel took the Trust to Tribunal, claiming that their approach when calculating her holiday meant that she received under her entitlement.
Both The Court of Appeal and Supreme Court decided in favour of Ms Brazel, and ruled that because her contract spanned the whole year (even though she only worked part of it), she was in fact entitled to 5.6 weeks’ paid holiday.
This means that Employers should now follow this ruling, however, caused further confusion regarding how casual staff working part of the year should be approached in terms of holiday accrual and pay, and of course whether this would mean that employees would be entitled to historic pay if holiday hadn’t been calculated this way prior to the case.
We think it’s positive that the current consultation period is short, suggesting that the government are treating the issue as high priority. It may well result in part-year workers being treated comparably to part-time workers where holiday entitlement is concerned.
This would certainly be more equitable than under current law, whereby part-year workers can end up with more leave and pay than a part-time worker despite sometimes working less hours annually.
Any upcoming changes will particularly affect the education sector, where term-time contracts are often more popular than any other kind. Those who engage zero-hours workers, variable hours workers and agency staff will also be affected.
For now, Harpur Trust v Brazel rules should be used to calculate annual leave for part-year workers until the consultation concludes… Watch this space!
If you do need any help with annual leave calculations, pay, or anything else HR-related, please give us a call on 0161 603 2156 and our friendly Supportis team will explore how we can help your business flourish.
