In a challenging economic climate with continuing budget cuts and increasing expectations of staff, sickness absence remains an ongoing problem that is important to address.
Another case that might challenge holiday-pay practice for variable hours staff has been decided by the EAT.
In the case of Brazel v the Harpur Trust, the EAT concluded that a Music Teacher engaged on a term-time-only contract was still entitled to the same statutory holiday pay as someone who works for 46.4 weeks per year. The EAT concluded that it wasn’t appropriate for her holiday pay to be pro-rated by the employer using the 12.07% approach set out in ACAS guidelines.
The EAT concluded she was entitled to 5.6 weeks holiday calculated in accordance with the provisions of the Employment Rights Act (based on her average week’s pay in the preceding 12 weeks in which she had worked), effectively 17.5% of her annual earnings. We understand there is going to be an appeal.
The decision did not expressly consider the accrual of holiday for variable hours staff nor the approach to the accrual of leave under the Regulations for variable hours staff. The claimant’s contract gave her the right to 5.6 weeks’ holiday, and we are aware that many providers apply the 12.07% principle in terms of accrual.
Who will this decision impact?
We consider the decision will affect everyone who works less than full time, in a flexible way, where their holiday pay (as opposed to the amount of leave they accrue) is capped at 12.07% of their earnings.
With fixed, part-time hours each week, their 5.6 weeks leave entitlement would equate to their standard working week, so the current approach wouldn’t change.
The impact of the decision could be significant for zero- hours workers depending on how holiday pay has been calculated under their contract to date.
Take the following example of how the case could apply in practice for a zero-hours with a standard holiday leave entitlement of 5.6 weeks. The zero-hours worker works full time for 12 weeks in a year. They would still be entitled to 5.6 weeks holiday paid at the amount of the average pay in the 12-week period.
Why have the EAT got to this conclusion?
In short, there is nothing within the Working Time Regulations that requires holiday pay to be pro-rated.
His Honour Judge Martyn Barklem, stated “I am unable to distil…any support for the proposition accepted by the ET that there is a requirement to carry out an exercise in pro-rating in the case of part-time employees, so as to ensure that full-time employees are not treated less favourably, or to avoid a “windfall” for term-time only workers.”
What isn’t clear from the judgement is whether the judge was also referencing the approach of pro-rating to the accrual of holiday entitlement.
We believe the case can be argued solely to apply to the calculation of holiday pay. The approach to the accrual for staff with variable hours has always been difficult given that holiday entitlement under the Working Time Regulations is expressed in terms of 5.6 weeks of leave and the EAT didn’t explore this issue.
As a result, we have the view that the case is not authority that an employer cannot cap the accrual of holiday at 12.07% of hours worked (a practice that is common for zero-hours staff). Sadly, the EAT did not expressly distinguish between the approach to the accrual of holiday leave (which we would argue should be pro-rated and should be capped) and to the calculation of holiday pay, which we accept should be based on average earnings in the previous 12 weeks worked.
So what should you do?
You will need to check how you have been calculating holiday leave and pay for any zero hours, term-time only or other staff with flexible hours, to check the extent of your potential exposure in light of this decision. This will help you decide whether you consider it is reasonable to change the approach to the calculation of holiday pay for anyone who is not full time and who does not have fixed hours. We would suggest taking legal advice specific to your situation if you have not been calculating holiday pay based on the previous 12 weeks income at the point leave is taken.
For more information on the issues raised in this article, please contact Matthew Wort.
Social housing providers will routinely have a number of construction projects underway at any one time. It is essential for client teams to understand and avoid key contract management pitfalls.
A recent case stands as a good reminder to employers to be careful when distinguishing between pensionable employment under a pension scheme’s rules and employment under a contract of employment.
By early morning on 3 May, it was clear that there had been a huge change in the composition of many councils across the country.
Following our new partner announcement, it is with great pleasure that we can announce additional promotions.
Even those of us with zero football knowledge will most likely know of the shenanigans at a Chelsea FC game this season.
The gig economy, the tensions between it, and our more established ways of working are rarely far from the news these days.
The case of Network Rail Infrastructure Ltd v Crawford  EWCA Civil 269 will not win awards for excitement but is useful guidance when dealing with workers’ rest periods under the WTR 1998.
Non-UK nationals will surely be worried about an uncertain future, with much still unclear. These feelings will inevitably accompany people to work, and so employers need to be prepared.
Pension disputes in the LGPS need to be dealt with through the Internal Dispute Resolution Procedure. Join Doug Mullen for a free 45 minute webinar on getting the process right.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.