Whilst it has been a while since legislation entered our statute books, designed to correct the peculiar situation that came from the Supreme Court decision in the Harpur Trust v Brazel case, employers with a January-December leave year will finally be able to implement this change soon. Let’s revisit this case and what it means for irregular hours and part-year workers.
Harpur Trust v Brazel:
The claimant was a school music teacher. As part of a zero hours term-time only contract, they worked at a school on a regular basis and only paid for the work they carried out. Generally, they worked for around 32 hours per week.
As the school year provided more holidays than the statutory minimum, the claimant’s paid holiday entitlements were calculated by assessing their earnings at the end of each of three school terms and working out one-third of 12.07% of that figure. The school believed that this was in keeping with guidance from Acas.
The claimant, however, argued that this system did not comply with the provisions of the Working Time Regulations 1998 (WTR) and therefore did not provide the claimant with the holiday pay that they were entitled to.
The claimant brought a claim to the Employment Tribunal (ET) for unlawful deductions from wages. The claim made its way to the Supreme Court who held that the Employment Rights Act provided a method for calculation of a week’s pay, and that using other methods, such as the “percentage method” was not in line with parliamentary policy. This was based on the absence in the WTR of a method to calculate pro rata leave for those still employed but not required to work every week of the year.
The Supreme Court’s decision meant that annual leave could not be pro-rated for permanent part-year workers. This was because it held that the WTR just did not allow for it, but this produced an odd result. This is because it meant that part-year and irregular hours workers were entitled to receive 5.6 weeks paid annual leave per leave year, the same as those working full-time, even though they weren’t working the same amount as them. This was great for the part-year and irregular hours workers, but it did seem unfair to employers and individuals working full time, because it wasn’t reflective of the hours of work that the irregular hours or part-year workers had put in.
Consequently, the government stepped in.
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Who is a part-year worker or an irregular hours worker?
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How did it change?
Following the Supreme Court decision in the Harpur Trust v Brazel case, the previous government passed legislation, the Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, to correct the situation so that irregular hours and part-year workers would accrue holiday proportionate to the hours that they work. This means that holiday will accrue, on the last day of the pay period, at the rate of 12.07% of hours worked in that pay period.
Employers can only implement this for leave years that start on or after 1 April 2024, so for organisations that have a January to December leave year, they are having to wait until 1 January 2025. This is now, however, fast approaching. It is also important to note that if it means that there will be a change to the worker’s terms, their agreement should be sought first.
Rolled-up holiday pay:
The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 has also changed the law so that for holiday years starting on or after 1 April 2024, rolled-up holiday pay is once again lawful for irregular hours and part-year workers. In practice, it means adding on an extra 12.07% (where holiday entitlement is the statutory minimum) of total pay for work done in the pay period and paying it in each pay packet. The worker must still take the annual leave, they just don’t get paid for it when they are on holiday. It is up to the employer though whether or not they want to use rolled-up holiday pay. If they don’t want to then they can still pay the worker for the holiday when they take it.
If you have any questions on irregular and part year workers, or holiday entitlement, contact our HR Advice Team.
