Calculating holiday entitlement for part-year and irregular hours workers

Issues raised by Harpur v Bazel look set to run and run with the government now issuing a consultation into the matter, with responses requested by 9 March 2023. 

As you may remember, Harpur v Bazel concerned the method by which employers should be calculating holiday pay for part year workers (for example, term-time only workers). As a reminder, the Supreme Court suggested that a calculation of weekly pay for a part-year worker is that which is laid down by s.224 Employment Rights Act 1996, where the weekly pay amount is calculated by taking the previous 12 weeks of earnings (ignoring any at zero).

As the consultation paper states in the introduction, as a result of this judgment, a disparity in entitlement to holiday as now arisen in relation to part-year and part-time workers, whereby “part-year workers are now entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year”.

The Government is keen to address this disparity to ensure that holiday pay and entitlement received by workers is proportionate to the time they spend working and has launched a consultation into the matter, and would like to reach employers and individuals, in particular  employers and workers, business representative groups, unions and those representing the interests of groups in the labour market.

The consultation presents two options for defining a holiday entitlement reference period - a rolling reference period, or, the government’s preference of a fixed reference period to calculate holiday entitlement (bringing it inline with how the regulations currently work for those with fixed hours), as well as how the first 12 months of any individual’s employment might be calculated. The consultation then considers methods to calculate a day off, and then whether a flat rate for agency workers should be utilised.

We should note that the outcome of another case considering how holiday pay is calculated is still awaited to be handed down by the Supreme Court who heard Chief Constable of the Police Service of Northern Ireland v Agnew in December 2022. In particular, the court is considering whether gaps in underpayment will have any effect on whether back claims can be made for underpaid holiday pay as well as whether there has been discrimination against the respondents under the European Convention on Human Rights.

Posted on 01/30/2023 by Ortolan

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