Harpur Trust v Brazel and the Surprising Holiday Rights of Part-Year Workers
Key Contact: Claire Knowles
Author: Adam McGlynn
Recently, in the case of Harpur Trust v Brazel , the Supreme Court held that part-year workers on permanent contracts are entitled to the same 5.6 weeks’ paid holiday leave per year as full-year workers. This entitlement should, therefore, not be pro-rated to accrue only during the parts of the year during which the worker actually worked. While an accurate reading of the legislation, this causes a somewhat controversial outcome when applied alongside the holiday pay calculation method set out in the Employment Rights Act 1996 (ERA 1996). For workers without normal working hours, which will be the case for many part-year workers, a week’s pay should be calculated as an average of the most recent 52 weeks’ of earnings in which the worker received remuneration, reaching back up to 104 calendar weeks. This calculation ignores any weeks in which the worker did not receive any remuneration for the purpose of finding a week’s pay, keeping part-year workers on par with full-year workers in terms of holiday leave and pay entitlements despite not working as much. The ruling will have significant financial repercussions for thousands of employers who engage workers on casual and/or part-year permanent contracts.
Ms Brazel (the Claimant) worked as a school music teacher during term-time on a part-year contract that was hourly paid, but her contract ran throughout the year. Harpur Trust (the Trust) runs the school in which she was employed. The Claimant was entitled to 5.6 weeks’ holiday and her contract of employment specified this is to be taken during school holidays.
Prior to September 2011, the Claimant’s holiday pay was determined in accordance with section 224 ERA 1996. This accumulation was based around the ‘Calendar Week Method’ – a week’s pay was defined as the average weekly income in a period of 12 weeks ending with the start of the Claimant’s leave period. It ignored all weeks in which the Claimant did not receive pay. Please note that since this case began, the reference period has been extended from 12 weeks to 52 weeks.
From September 2011, the Trust changed its calculation method. Following ACAS guidance of the time, the Trust calculated the Claimant’s holiday pay by multiplying her total term-time pay by 12.07%, using the ‘Percentage Method’. As a result, the Claimant received less leave and, ultimately, less pay than if her holiday entitlements had been calculated by the Calendar Week Method. Ms Brazel brought a claim for unlawful deduction of wages against the Trust.
Despite the Claimant’s claim being dismissed by the Employment Tribunal (ET), the Employment Appeal Tribunal (EAT) allowed her appeal due to the statutory regime requiring the use of the Calendar Week Method. The EAT overturned the decision of the ET, and both the Court of Appeal and the Supreme Court allowed further appeals.
The Supreme Court dismissed the Trust’s appeal unanimously, finding in favour of the Claimant.
It was found that the Claimant accrued holiday leave by reference to time elapsed rather than time worked and so would be entitled to the same 5.6 weeks’ leave per year as any other worker on a permanent contract. It follows that the Calendar Week Method represents the correct method of calculating holiday entitlements regardless of whether they are full-year or part-year. This is the case even if it means that the part-year worker is entitled to a proportionately greater leave entitlement than a full-time worker. Indeed, while EU member states take a different approach, the Supreme court accepted that there was nothing preventing Parliament from treating part-year workers more favourably than full-year workers. While the precedent this case sets may be a little surprising, it accurately reflects the ‘policy decision’ taken by Parliament when they drafted the legislation. Whether Parliament now chooses to address this remains to be seen.
The decision reminds us that every worker is entitled to receive the same minimum entitlement of 5.6 weeks’ holiday leave per year, including, most importantly, workers who are on permanent part-year contracts. Employers should therefore review their existing contracts, as well as the wording of their holiday procedures/practices, to ensure robust compliance with this decision. Employers are also recommended to assess whether there may be historic liability for previously miscalculated holiday entitlement, which Acuity can assist with. Acting quickly to rectify any potential liability is highly recommended and we at Acuity can advise on various strategies should historic liability be discovered.
Holiday rights are notoriously complex. If you would like any assistance with the issues raised in this article or otherwise, please do not hesitate to get in touch with the employment team.