The Supreme Court has confirmed that the Working Time Regulations do not entitle an employer to reduce the leave entitlement of part-year employees so that it is proportional to other workers. It followed that calculating Mrs Brazel’s holiday pay at 12.07% of the payment she received for the hours she worked was a breach of the Regulations.
Mrs Brazel is a music teacher and was engaged by Harpur Trust on an annual contract. There were no minimum hours of work guaranteed and no normal hours of work. She worked term times only and was required to take her statutory annual leave in the school holidays. Originally her holiday pay was calculated in accordance with the averaging provisions incorporated into the Regulations, which stipulate how a week’s pay should be calculated for workers with no normal hours.
However, in 2011 the Trust changed the calculation to the percentage method – ie paying 12.07% of her pay for each term by way of holiday pay, on the basis that for a full-time worker, 5.6 weeks’ holiday represents 12.07% of the full working year. This meant a significant reduction in her holiday pay, which she argued was in breach of the Regulations. The employment tribunal dismissed her claim, but its decision was reversed by the Employment Appeal Tribunal. The Court of Appeal dismissed the Trust’s appeal in 2019, and this decision has now been endorsed by the Supreme Court.
If follows that Mrs Brazel’s holiday pay should have been calculated applying the week’s pay provisions that the Trust had previously used, which required averaging her weekly pay over a 12 week reference period, ignoring weeks when she did no work at all. Since the facts of this case, this reference period has been increased to 52 weeks.
The Supreme Court said that the alternative methods of calculation advocated by the Trust were excessively complicated and could not be read into the Regulations. While there was an element of “rough justice” in the way the averaging provisions worked, there was no reason in principle, whether under domestic or retained EU law, why part-year workers should not be favoured in this relatively limited way, when compared to full time workers.
The ACAS guidance (on which the Trust relied when implementing the percentage method) has now been re-written to reflect the Court of Appeal’s judgment. The Supreme Court’s decision therefore comes as no surprise. While it will result in increased holiday pay for some workers whose employers are still using the percentage method, it represents a welcome clarification of the law.