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Holiday pay for ‘term-time’ workers should not be pro-rated

The latest case from the Court of Appeal (on appeal from the Employment Tribunal) on holiday pay was made in August and will have implications for many employers, particularly those in the education sector who may be agreeing new contracts for staff this month.

Many employers in the education sector will be used to making pro rata reductions for holiday entitlement for workers who work term time only and irregular hours.

The Harpur Trust v Brazel 2019] EWCA Civ 1402 shows that a straightforward pro rata approach will not comply with the law where the worker concerned works irregular hours and only works for part of the year. The Court of Appeal agreed with the Employment Appeals Tribunal that part time work is different from part year work and were at pains to emphasise that this decision only refers to those on permanent contracts.

Holiday pay is calculated by identifying a week's pay and multiplying it by 5.6, as per regulation 16 of the Working Time Regulations. “A week’s pay” for a worker with irregular hours is identified by averaging earnings over the 12 week period ending with the beginning of the leave (Section 224 of the Employment Rights Act) and any weeks where no work is undertaken are ignored for the purposes of the calculation.

Employers who are currently capping holiday pay at 12.07% using the pro-rata multiplier previously recommended by ACAS run the risk of unlawful deduction claims being brought by term time workers.  The 12.07% multiplier is calculated by taking the standard working year at 46.4 weeks (52 weeks less the 5.6 week holiday entitlement) and 5.6 weeks of 46.4 weeks being 12.07%.

Posted on 5 September, 2019 by Ortolan

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