News & Insights

A windfall for term-time and irregular workers?

Jackie Denham reports on the EAT’s recent clarification on holiday pay calculations.

Workers are generally entitled to receive the same pay while they are on annual leave as they normally receive while they are at work. Where a worker has no normal working hours, a week’s normal pay for these purposes should be calculated based on the amount of the employee’s average weekly remuneration in the twelve weeks prior. In addition, part-time workers are protected from being treated less favourably than a comparable full-time worker. In the recent case, the Employment Appeal Tribunal (EAT) was asked to determine if a similar approach should be taken to the calculation of holiday pay.

Mrs Brazel was a part-time music teacher mostly working only during term-time under a zero hours contract. She had a contractual and statutory right to 5.6 weeks’ holiday pay. Her employer was aware that calculating her holiday pay under the normal rules would mean she was treated more favourably than an employee who was contracted to work throughout the year.

It therefore pro-rated her allowance using ACAS guidelines on how to calculate the number of days’ holiday casual workers or those carrying out very irregular hours. Mrs Brazel therefore received holiday pay at the end of each school term calculated at a rate of 12.07% of the pay she received for the hours worked during that term. (The reasoning behind this is that an individual with 5.6 weeks’ holiday spends 46.4 (52 – 5.6) weeks a year at work, and 5.6 weeks is 12.07% of these 46.4 weeks.). She brought an unlawful deduction of wages claim, which was initially dismissed by the tribunal.

However the EAT upheld Mrs Brazel’s appeal. The EAT found that there is no principle in law that part-time workers cannot be treated more favourably than full-time workers and there was no basis for her employer not to follow the twelve week reference period.

In light of this clarification, if your organisation has employees or workers who work irregular hours throughout the year or who do not work throughout the year, we recommend you audit your approach to holiday pay calculations to ensure you are compliant. If you would like us to review your contracts or policies in this regard please just let us know.