Harpur v Brazel: Supreme Court decision on calculating holiday for part-year workers

Last week, the Supreme Court handed down its long-awaited judgment in the case of Harpur v Brazel dealing with a key principle in relation to how to calculate holiday for part-year workers.

Historically, many employers with staff working for only part of the year (albeit on permanent contracts) have calculated holiday entitlement and pay for irregular workers at the rate of 12.07% of hours worked (the “Percentage Method”).

Facts of Haspur v Brazel

Ms Brazel was a music teacher at a school run by the Harpur Trust. She worked a variable number of hours each week and was only paid for the hours she worked during term-time. She did not work every week in the year and, to that extent was both “part-time” and “part-year”.

The facts of this case are set out in more detail in our previous article here, but Ms Brazel challenged the Percentage Method asserting that it resulted in her receiving less holiday pay.

The Court of Appeal held that it was wrong to cap holiday pay at 12.07% of time worked. Instead, holiday pay should be calculated using the average weekly earnings during the 12-week period (now 52 weeks following the changes brought in by the Good Work Plan in 2020) immediately preceding the date the holiday was taken (the “Calendar Week Method”).

The Harpur Trust appealed, asserting that the paid leave entitlement of a part-time worker should be pro-rated to reflect the hours they actually work.

Supreme Court decision

The Supreme Court unanimously dismissed the appeal.

It held that whilst the Calendar Week Method may slightly favour atypical workers, this had been the choice of the Government when drafting the legislation, and it was not inconsistent with the European Working Time Directive.

Even if the Harpur Trust could show that the 12.07% formula offered a “simple, principled solution to all working patterns”, the Supreme Court did not accept that it was the principle underlying the Working Time Regulations that holiday entitlement should be pro-rated according to working pattern. It made clear that all part-year workers are entitled to 5.6 weeks paid holiday each year. The suggestion that workers only accrue annual leave when they are actually working is incorrect – it is earned over the totality of the contract each year.

It confirmed that the correct approach for permanent part-year workers is to assess a week’s pay based on the average weekly pay for the 52 weeks before the first day of the relevant holiday, ignoring weeks not worked, and multiply this by 5.6.

The only circumstances where an employer can pro-rate someone’s holiday is when they start or leave employment part-way through the leave year.

What does this mean for employers?

This decision clarifies the position for many who were waiting to see if the Court of Appeal’s decision would be overturned.

This judgment is definitive and could have a significant impact on the education sector.

Employers should review holiday pay and accrual arrangements and ensure all part-year workers receive 5.6 weeks’ leave each year, with their average pay calculated on a 52-week basis. It may be that in practice this would be easiest to do by assessing an average period of work, calculating the holiday allowance and pay on that basis, and performing a recalibration exercise every quarter, for example.

However, these calculations can be complicated and time and resource extensive, and it is strongly recommended that you seek legal advice on your organisation’s particular circumstances.

Contact our employment law solicitors today

If you have any concerns about the holiday pay calculation and the elements of pay that should be included, you should seek legal advice. The Employment team at Ashtons are versed in advising clients on holiday pay and would be happy to assist.

Please get in touch with our specialist Employment Law team through this website or by calling 0330 191 4836.

Our partners at Ashtons HR Consulting are also on hand to assist you.