Harrison Drury’s employment law team, provides an update on the final decision on a recent case regarding holiday pay for part-year workers and offers points to consider for employers with part-year employees due to the outcome.
In late 2019, we covered the Court of Appeal ruling on The Harpur Trust v Lesley Brazel & UNISON  EWCA Civ 1402, which considered how holiday entitlement and pay should be calculated for part-year workers, working under permanent contracts.
Following an appeal by the Harpur Trust, the Supreme Court recently handed down its Judgment.
In summary, the Supreme Court upheld the judgment of the Court of Appeal, confirming that part-year workers must receive at least 5.6 weeks’ paid holiday each year (which equates to 28 days for those who work a five-day week), regardless of the number of weeks that they work across the year.
This case will be relevant for workers that have an ongoing contract (i.e. permanent staff rather than those on fixed-term contracts), but only work some weeks of the year (e.g. they might only work during school term-time).
Calculating holiday entitlement for part-year workers
It has been acknowledged by the Supreme Court that this may cause unusual and extreme results.
For example, the effect of the judgment means that an employee on a permanent contract who is paid £1,000 for working only one full week each year (such as exam invigilators), would be entitled to 5.6 weeks’ paid annual leave, at £5,600.
It is worth noting however that only those part-year workers who work five days per week will be entitled to the full 28-day holiday entitlement.
An employee working term-time for two days each week will only be entitled to 11.2 days’ annual leave each year, as this amounts to 5.6 weeks’ holiday based on their usual working week (5.6 weeks times two working days/week = 11.2 days holiday).
Similarly, those part-year workers who work just a few hours per week (rather than on specific days) are entitled to 5.6 weeks’ leave based on the hours worked.
The importance of keeping detailed and accurate employee records
In terms of the holiday pay that part-year workers should receive; this should be based on their average pay for the past 52 weeks in which they performed work (ignoring any weeks where the contract has continued but no work has been performed/pay received).
Therefore, to carry out this calculation, employers may need to look back further back than the last 52 weeks, up to a maximum of 104 weeks. As such, employers should keep detailed and accurate records of hours or days works, to enable them to calculate this average.
Looking to the future
As a result of this judgment, employers with permanent part-year workers may wish to reconsider their contractual terms (and identify whether it may be more appropriate to switch to fixed-term contracts, for example) and will certainly need to review the annual leave entitlements.
If you operate a business and are concerned that you may have underpaid part-year staff in relation to holidays, we recommend taking legal advice as soon as possible in order to mitigate any potential claims employees may have.
If you would like to receive further advice regarding the holiday entitlement for your part-year workers, please contact Harrison Drury’s employment law team on 01772 258321.