A recent ruling by the Court of Appeal creates a new holiday entitlement complication for those employing people on an intermittent basis. The ruling applies to “part-year”, and potentially other, workers.
The complication arises for employees who work for only part of a year but are employed for the whole year. In Harpur Trust v Brazel, Ms Brazel had a contract for 5.6 weeks holiday per year. She did not work during the summer holidays.
Her holiday pay was determined by 12.07% of the pay that she had received in the previous 12 weeks. This is rolled up holiday pay. It did not amount to 5.6 weeks paid holiday in the year, as her contract provided.
The Court of Appeal has determined that Ms Brazel is entitled to be paid a full 5.6 weeks holiday. This is to be based on her pay in the previous 12 weeks that she has worked, i.e. not on rolled up holiday pay. This entitlement was based on her contract.
The intriguing aspect of this ruling is that it seems that, potentially, Ms Brazel could work for another employer outside term time and receive 5.6 weeks holiday pay from both!
The Harpur Trust may yet appeal to the Supreme Court.
Implications for employers
- If you have employees (students on vacation, for example) who work for you on only a few weeks per year then their contracts should make clear that their holiday entitlement will be pro-rata to the weeks worked. Pay will need to be based on average earnings over the previous 12 weeks worked (which changes, in April 2020, to 52 weeks).
- You might consider dismissing part-year employees when not needed and re-engaging them on the next opportunity.
- Many employers still offer rolled up holiday pay (i.e. an extra 12.07% paid on top of the agreed hourly rate). If you do this, make sure that the 12.07% is specified as a payment in addition to the hourly rate. Paying holiday in this way is a practical approach for those workers who may be employed intermittently. However, ACAS say employers should not do this!
- Another option is to roll-up holiday time (at 12.07%) and keep the time in a “bank” to be paid when the employee actually takes holiday.
- Whichever method you choose, make sure it is specific, and stated in the written particulars that you provide to the employee.
- Remember that you cannot change existing contracts unilaterally, i.e. without the employee’s consent. So, if you do want to make changes it would be wise to seek advice.
Employer Solutions Ltd can only provide general guidance, blogs are not to be taken as an authoritative interpretation of the law.
Malcolm Martin FCIPD
Author Human Resource Practice