Brazel v The Harpur Trust
In this case the EAT considered the correct calculation of holiday pay for a term time only employee. It held that a term time only employee should have holiday pay calculated on the basis of the average of last 12 working weeks’ pay rather than on the basis of the customary 12.07% of pay.
Mrs Brazel worked under a term time only zero hours contract as a visiting music teacher at a school. She worked between 32 and 35 weeks per year. Her contract entitled her to 5.6 weeks’ paid annual leave. She was required to take all her leave during school holidays. Her holiday pay was “rolled up” (that is, she was paid an element of holiday pay in each pay packet) and it was calculated as 12.07% of her pay.
She brought a claim for unlawful deductions from wages, arguing that her holiday pay should be calculated under the week’s pay provisions set out in the Employment Rights Act 1996. This states that a week’s pay for workers with variable hours should be calculated on the basis of average pay over the preceding 12 weeks. This calculation should ignore any weeks during which the worker receives no pay. In the case of a term time worker this would mean holiday pay is based on the average pay over the last 12 working weeks and excluding any school holiday weeks. This results in a higher rate of pay when compared to a full-time worker. If Mrs Brazel worked only 32 weeks in a year, the tribunal calculated that she should have been paid holiday pay at a rate of 17.5% of annual earnings.
The effect of the 12-week average approach is that holiday pay as a percentage of annual earnings for a part-timer on a 32-week 'year' would be 46.4/32 x 12.07% = 17.5% - effectively giving proportionately more holiday pay than a worker working throughout the year getting 5.6 weeks paid leave.
Employers commonly use a calculation of 12.07% of hours worked to work out holiday leave entitlement and it is a common shortcut also to use this calculation for holiday pay. The calculation is based on a standard working year of 52 minus 5.6 weeks (46.6 weeks): 5.6 divided by 46.6 is 12.07%.
The employment tribunal dismissed the claimant’s claim.
The EAT did not agree with the tribunal decision and made clear that there is no requirement to pro-rate the statutory minimum holiday for part time workers in order to ensure that full-time workers are not less favourably treated. Legislative protection works the other way around to protect part time workers from being less favourably treated than full-time workers. In essence, there is no scope for calculating holiday pay under the Working Time Regulations so as to avoid a 'windfall' for part-timers, or to avoid full-timers not being treated less favourably.
Employers who engage seasonal or term time only workers (the EAT noted that this judgment would be of importance for some schools and teachers) should consider whether the way they calculate holiday pay should be reassessed in the light of this judgement. In the case of a term time worker who works 32 weeks per year, the holiday pay calculation should be 5.6 divided by 32 weeks (17.5% of pay).