Holiday Pay For “Part-Year” Employees – Harpur Trust Loses High Profile Pay Dispute Case

The long-awaited decision from The Harpur Trust v Brazel is not good news for employers within the education sector.

The Supreme Court has ruled that part-year workers are entitled to the same holiday entitlement as their year-round part-time or full-time colleagues.

The Harpur Trust v Brazel

Case facts

Ms Brazel is a music teacher at a school and so she only works during term time but her contract extends throughout the year. She is paid hourly and works variable hours. The Harpur Trust was previously calculating Ms Brazel’s holiday pay in line with the ACAS guidance; namely, by finding her earnings at the end of each term and paying her an additional 12.07% of that figure. This effectively meant that Ms Brazel was receiving a holiday entitlement of 12.07% of the hours she had worked that term.

The 12.07% percentage was suggested by Acas and is commonly used by employers because this is a proportion that 5.6 weeks of the holiday are to the total working year of 46.4 weeks (5.6 divided by 46.4 is 12.07%).

Ms Brazel claimed that this method of calculating her holiday pay was not compliant with Working Time Regulations and brought a claim for unlawful deductions from her wages by underpayment of holiday pay. At the time of the claim, the Working Time Regulations stated that for people who worked variable hours, holiday pay should be calculated using the average of the previous 12 weeks’ pay.

Judgement

Ms Brazel was initially unsuccessful in her claim because the Employment Tribunal ruled that The Harpur Trust had applied the correct method of calculating holiday pay.

However, Ms Brazel’s case was subsequently upheld in both the Employment Appeal Tribunal and the Court of Appeal. Following this, the Supreme Court considered the case in November 2021, with judgement being given on 20 July 2022.

The Supreme Court found that Ms Brazel should receive the same holiday entitlement (namely, 5.6 weeks) as her colleagues that work all year round and unanimously ruled in her favour. They found that the method used by The Harpur Trust was directly contrary to the statutory method in the Working Time Regulations which state that all workers should receive 5.6 weeks of holiday, regardless of the proportion of the year that they work. Further, the Supreme Court ruled that Ms Brazel’s holiday pay should have been calculated based on her average pay over the previous 12 weeks.

The current position

The Supreme Court was looking at the legal position in respect of holiday pay between January 2011 and June 2016, which is when Ms Brazel claimed that she was underpaid in respect of her holiday entitlement.

The law on holiday pay changed. However, on 6 April 2020. From this date, employers have had to calculate holiday pay using an average of weekly earnings from the past 52 weeks in which the employee worked, as opposed to the past 12 weeks.

ACAS has changed their guidance to reflect the Supreme Court’s findings and the April 2020 law update. The guidance states that:

Comment

It is likely that a lot of employers will disagree with the Supreme Court ruling as up until now they will probably have been using the same method as The Harpur Trust and will have pro-rated holiday entitlement to reflect the number of weeks workers work each year. Employers will now have to explain to their full-time colleagues why their colleagues who only work for part of the year are entitled to the same holiday entitlement, as well as having to explain to part-time employees that work the same number of hours as “part-year workers” that they are entitled to less holiday than their colleagues.

This ruling is not only likely to cause confusion for employers but is also likely to be a significant financial burden and it may be a good time for employers to consider the type of employees they engage and whether part-year employees need to be hired on year-round contracts.