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HCR Law Events

15 September 2022

Harpur Trust v Brazel: Holiday pay for part-year workers – key questions answered

Following the decision of the Supreme Court in the case of Harpur Trust v Brazel we have received several questions in relation to its impact. Below is a summary of the questions asked and our responses. For a detailed analysis of the Supreme Court judgment please refer to our guidance note which can be accessed here.

If an employee works two separate roles within a school, subject to separate contracts, are they entitled to two lots of statutory holiday entitlement?

Yes. Although the Working Time Regulations 1998 state that statutory holiday entitlement is subject to a maximum of 28 days, this must refer to each employment. By way of example, a school employs a teacher under a standard part-time teaching contract. The school then agrees a separate casual worker contract with the individual covering ad hoc supply work to run concurrently to the substantive teaching post. The teacher will be entitled to statutory holiday under that separate casual contract, in addition to their entitlement under the part-time teaching contract.

This is to be contrasted from a situation in which a worker works overtime in addition to their substantive hours but not subject to a separate contract or role. In those circumstances, there is unlikely to be an entitlement to an additional statutory holiday entitlement, but any overtime pay may need to be factored into holiday pay calculations depending on the type of overtime worked and/or the extent to which it is regular or recurring in nature. Legal advice should be sought based on a school’s specific circumstances.

Can we continue to pro-rate our contractually enhanced holiday entitlement for part-year workers if this results in them getting at least 5.6 weeks’ paid holiday per year?

The decision in Brazel makes it clear that part-year workers must be entitled to at least the minimum of 5.6 weeks’ (28 days) statutory holiday. The holiday entitlement of a part-year worker cannot be pro-rated based on the weeks of the year worked to fall below the statutory minimum. So, provided the part-year worker is receiving, as a minimum, 5.6 weeks’ holiday, paid at their normal weekly pay each holiday year, this is compliant with the ruling in Brazel.

We are aware that many schools offer a contractually enhanced holiday entitlement. If a school is currently pro-rating the contractual holiday entitlement, but this still results in the part-year working benefitting from at least 5.6 weeks’ leave paid at their normal weekly pay, the school may decide to continue with the current calculation method, but this would need to be kept under review to ensure that no part-year worker has their entitlement reduced below 5.6 weeks for the year as a result.

There is potentially a risk from a discrimination perspective if this approach results in a full time, full year equivalent benefitting from an additional contractual enhancement in holiday entitlement in comparison to a part-time, part-year worker. Our view is that the risk is likely to be low, assuming the part-year worker is receiving 5.6 weeks’ paid leave as a minimum and, overall, this is at least the pro-rata equivalent of a comparable full-time workers entitlement. Having said that, we are not aware that this specific issue has been tested in law.

How are the rules for calculating a week’s pay affected for zero hours staff if there are no hours recorded for the holiday year in question, or within the prior 104 weeks?

All workers are entitled to 5.6 weeks’ paid holiday in each holiday year. This must be paid at the rate of a ‘week’s pay’ for each week of holiday. Where a worker has no normal working hours (i.e., zero hours), a week’s pay is calculated as the average weekly remuneration over the previous 52 complete weeks (or, if the employee has been employed for a lesser period, to the period of complete weeks for which they have been employed). Weeks in which no remuneration is earned do not count for the purposes of this calculation: instead, it is necessary to count only those weeks in which remuneration is earned (looking back up to 104 weeks before the period of leave) until 52 weeks (or the applicable lesser period of weeks) are taken into account.

Where a zero hours worker has not worked any hours in the holiday year in question, they remain entitled to 5.6 weeks’ paid holiday for that year. The calculation of a week’s pay for this purpose would extend to 104 weeks and would include weeks worked in the previous holiday year to ascertain average weekly pay. This would then be the basis on which holiday pay is calculated and paid for the current year, as per the 5.6-week annual entitlement.

There may also be limited circumstances in which schools have zero hours staff on a bank, subject to permanent continuous contracts, who have not carried out any work within the 104 weeks prior to the period of leave, or at all (i.e., there are no hours on which to calculate average weekly pay in accordance with the calculation method set out above). In these circumstances, technically, a week’s pay should be calculated as the amount which fairly represents a week’s pay, having regard to:

  • Any remuneration received by the employee in respect of the employment in question (i.e., beyond the 104-week period)
  • The amount offered to the employee as remuneration in respect of the employment in question
  • The remuneration received by other persons engaged in relevant comparable employment with the same employer
  • The remuneration received by other persons engaged in relevant comparable employment with other employers.

Statutory holiday pay should then be paid in these circumstances based on this assessment of a fair representation of weekly pay even though no work has been carried out.

Our view is that the risk associated with this situation is low, as we are dealing with workers who have not undertaken any work for a school for a significant period finding themselves entitled to a payment of 5.6 weeks holiday pay each year based on a fair assessment of weekly pay.

It may be considered unlikely that such individuals would expect to receive holiday pay or seek to challenge any underpayment in these circumstances. Having said that, this consequence of the decision in Brazel should prompt schools to review their bank staff arrangements to avoid retaining individuals on continuous contracts who have not undertaken work for significant periods of time but are nevertheless accruing statutory holiday.

Schools should seek legal advice when considering strategy for addressing any risk associated with the decision in Brazel.

What approach should we take to calculating average weekly pay if we do not hold records of the specific weeks worked by zero-hours staff (for example, where a zero-hours worker is paid monthly, and a weekly breakdown of hours worked is not retained)?

To calculate average weekly pay for holiday pay purposes in respect of a worker with no normal hours of work (i.e. zero-hours), an employer is required to look back over the last 52 weeks of work, and effectively take an average of pay received. Weeks where the employee carried out no work must not be considered, and therefore school holiday periods, and other weeks where no hours are worked, should not be included when looking at the last 52 weeks. This inevitably means taking account of weeks in the last academic year, with many VMTs for example working for between 30 and 34 weeks of the year.

Note that only weeks of work which took place during the last 104 calendar weeks should be counted. Therefore, if fewer than 52 weeks of work were undertaken in the last 104 weeks, the week’s pay should be calculated on the basis of these weeks only.

To do this calculation it is necessary for schools to maintain accurate records of the weeks of the year worked by zero-hours staff. Difficulties can arise where such records are not held. Where this is the case, schools should consider whether the current arrangements can be adapted to ensure that records are retained of the weeks of the year worked by those working on a zero-hours basis.

Alternatively, where this is practically difficult, schools may opt to take the pragmatic approach of calculating average weekly pay based on the pay actually received over the course of the last academic year or two academic years.

Whilst this would not strictly accord with the calculation method set out above, in the majority of cases it is unlikely to result in any significant prejudice to the worker (and may depending on the circumstances be to their benefit). Applying a reference period of two academic years would be the safer approach as this would ensure that the maximum period of 104 weeks has been considered. Schools should, however, take legal advice on their specific circumstances before adopting this approach, in particular where the pay received by a zero-hours worker fluctuates considerably from one year to the next.

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Oliver Daniels, Partner

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