Important part time holiday case – review your practices

Schools that calculate part time holiday for those working fluctuating hours on the basis of the 12.07 per cent multiplier will need to change their practices as a result of the case of Mrs L Brazel v The Harpur Trust.

Mrs Brazel was a peripatetic music teacher who worked part time, mostly during term time, at Bedford Girls’ School under a zero hours contract. She had a contractual right to 5.6 weeks’ holiday pay. The school calculated her holiday entitlement on the basis of 12.07 per cent of her total pay over the year.

She had to take her holiday during school closure periods and was paid her accrued holiday pay three times a year in April, August and December.

Mrs Brazel, who was represented by the Incorporated Society of Musicians (ISM), argued that paying 12.07 per cent of annualised hours was incorrect. She argued that the correct calculation should have been based on the average over the previous 12 weeks that she worked prior to the holiday being taken.

ACAS guidance states that the statutory holiday entitlement of 5.6 weeks equates to 12.07 per cent of hours worked over a year. This is what the school relied on in calculating Mrs Brazel’s holiday in the way that they did.

However, the ISM argued that under Regulation 16 of the Working Time Regulations and section 224 of the Employment Rights Act 1996, for those working irregular hours, the calculation should be pay averaged over the 12 weeks prior to holiday being taken.

The school argued that to pay Mrs Brazel based on the 12 week average would mean that she would get an unfair windfall. This is because the calculation would be based on the previous 12 weeks worked, rather than her work over the full year (where she would have periods of time where she would not be working at all).

Mrs Brazel initially lost this case at employment tribunal. The tribunal found that paying Mrs Brazel using the 12 week method would result in her receiving around 17.5 per cent of annualised hours as holiday pay, which would be more than a comparable full time employee.

Mrs Brazel appealed this decision. The Employment Appeal Tribunal (EAT) disagreed with the employment tribunal’s finding and decided that Mrs Brazel had been underpaid holiday pay. The reasoning behind this decision was that part time workers should not suffer detriment based on their part time worker status. The EAT did not see it as an issue that this would mean that comparably, part time workers would receive more than full time workers. The EAT decided that the calculation was actually straightforward – it should be based on an average of the 12 week period before the holiday was taken.

The EAT sent the case back to the original tribunal to do the calculation. In the judgment, the EAT acknowledged that although the amount of money that this case involved was low, it would have a significant impact on schools in particular. The EAT stated that any claims for failure to pay holiday pay should be treated as a deduction from wages claim.

What do we do now?

For schools that use the 12.07 per cent multiplier, this case will have a significant impact. This case now says effectively that this practice is unlawful. The current ISBA Visiting Music Teacher and Zero Hours Contracts are being updated and amended to reflect this decision.

There is a risk that this case may trigger a series of claims from employees and workers for back pay of holiday pay on the basis that they may have been underpaid. As mentioned above, Ms Brazel was supported in this case by the ISM, so this case is also likely to be publicised by music unions.

Schools should therefore take the following steps:

1. Review the number of employees or workers who are paid holiday pay by this method.
2. Calculate the likely cost of rectifying the underpayment.
3. Decide on a strategy for dealing with this situation.
4. Consider changing the method of calculating holiday pay going forward and the best way to achieve this.
5. Review and update contracts with existing workers and employees who work fluctuating hours.

Holiday pay is a notoriously tricky area and one that has been considered on a regular basis by the courts. Schools would be advised to take advice on the best way to deal with this situation both from a legal and employee relations perspective.