Following Supreme Court’s July 2022 ruling in Harpur Trust v. Brazel, the Government has announced a consultation that is looking to change the calculation of holiday entitlement of part-year and irregular hours workers.
Harpur Trust v Brazel
The case concerned the holiday entitlement and pay for a music teacher who was engaged on an ongoing contract of employment but was only required to work during term-time. The Supreme Court held that Ms Brazel’s annual leave entitlement under the Working Time Regulations 1998 should not have been prorated so that it was proportionate to the amount of time she actually worked.
Full details of this case can be found in our August 2022 blog.
The Government’s consultation
The Supreme Court acknowledged in Harpur Trust that its decision could result in anomalies. For instance, following the judgment part-year workers are now entitled to more annual leave than part-time workers who work the same number of hours across the year. The purpose of the Government’s consultation is to address these anomalies and ensure that the annual leave entitlement for all workers is proportionate to the amount of time they spend working.
The Government’s proposals are:
- To calculate a part-year/irregular hours worker’s annual leave entitlement in proportion to the number of hours worked over the previous 52 week period, including weeks where the worker does not carry out any work. The entitlement would then be calculated by multiplying the total number of hours by 12.07%.
- The Government recognises that for workers with irregular hours there must also be a way of calculating how much of their annual leave entitlement they use when they take a particular day off. The Government’s preferred method is to use the 52-week reference period to calculate a flat average working day, whereby a day of annual leave is equivalent to the average number of working hours as day; and
- The Government also recognises that agency workers present a more complex challenge as the nature of agency work would make a 52-week holiday entitlement reference period impractical. The Government proposed approach is to calculate their holiday entitlement as 12.07% of the hours worked at the end of each month of assignment.
This consultation proposes to change the holiday entitlement calculation for part-year and irregular hours workers only and will not affect the calculation for those with normal or fixed working hours. This consultation will be of particular importance to employers who engage this type of worker, for example those in the education, recruitment or care sectors who are more likely to use part-year or zero hours workers.
Calculating the holiday entitlement and pay for this type of worker has historically proven to be a complicated process, often requiring the courts to intervene. The Harpur Trust decision further complicated this and left some employers scratching their heads as to how best to calculate the holiday entitlement for their irregular hours workers.
The consultation is therefore an opportunity to provide some welcome certainty to the process. The Government encourages all affected employers to respond to the consultation to help frame its thinking. Devonshires is in the process of reviewing the proposals and will respond to the consultation before it closes on 9 March 2023.
For more detailed information on the content of the Government’s consultation and the impact their proposals might have on you, please contact a member of the Employment Team.