In Harpur Trust v Brazel, the Supreme Court unanimously ruled that part-year workers who are engaged under permanent contracts are entitled to 5.6 weeks of annual leave, and their entitlement should not be reduced pro rata to reflect the number of hours they work.
Ms Brazel was a music teacher employed by Harpur Trust. Despite being a part-year worker in that she was only required to work during term time, Ms Brazel was employed on a permanent contract for the whole year. Ms Brazel was only paid for the hours she taught, with the number of hours she worked varying each week depending on the number of students requesting lessons.
Under the Working Time Regulations 1998 a worker is entitled to a minimum of 5.6 weeks’ paid annual leave per year. Harpur Trust operated the commonly used 12.07% accrual method to pro rata Ms Brazel’s annual leave entitlement in proportion to the number of hours she worked. Specifically, Harpur Trust calculated her annual leave entitlement as 12.07% of the total hours she had worked in the previous term.
Ms Brazel brought a claim for unlawful deduction from wages on the basis that the 12.07% accrual method was incorrect, and Harpur Trust had miscalculated her holiday pay. The case eventually made its way to the Supreme Court, after the Employment Tribunal previously found in Harpur Trust’s favour, and both the Employment Appeal Tribunal and Court of Appeal finding in Ms Brazel’s favour.
In a unanimous decision, the Supreme Court found in Ms Brazel’s favour and concluded that the annual leave entitlement for part-year workers under a permanent contract should not be pro-rated. The Working Time Regulations 1998 do not contain any reference to annual leave being calculated based on amount of work carried out, and therefore the court determined that such workers are entitled to 5.6 weeks’ of annual leave regardless of how many hours they have worked.
The Supreme Court recognised that on occasion this decision would put part-year workers in a more advantageous position in being entitled to a proportionally greater amount of leave than full-time workers. However the court determined that UK law does not prohibit part-year workers from being treated more favourably than full-time ones.
The Supreme Court made the differentiation between part-year workers, and part-time workers. The judgment does not change the calculation of part-time workers who work normal hours under their contracts.
The judgment applies to workers with irregular working hours who are engaged under ongoing contracts which continue even where they are not working (part-year workers). For example, zero hours workers who work on an ad hoc basis but are engaged under permanent overarching contracts which continue to apply between assignments.
The Court has determined that these workers are entitled to 5.6 weeks annual leave per year, and the 12.07% accrual method should not be used to pro-rata their annual leave in proportion to the amount of hours they work.
Employers who engage workers under such contracts and use the 12.07% accrual method could now find themselves liable for backdated unlawful deductions from wages claims or claims for breach of the Working Time Regulations 1998. Employers who consider they may be at risk should review and update their contracts and/or holiday practices to protect against future liability, and assess their potential liability for backdated claims.
Please contact a member of the Employment Team for advice and further information on the impact of this case on your business or on your contract of employment.