Calculating holiday pay for part-time workers
Workers on zero hours contracts and term-time only workers may be entitled to more generous holiday pay following a recent Court of Appeal decision. The Court of Appeal in Harpur Trust v Brazel  found that a teacher employed to work term time only was entitled to holiday pay of 17.5 per cent of her earnings, compared to about 12 per cent of annual salary for employees who are employed to work all year.
Mrs Brazel was employed on a permanent zero-hours contract as a visiting music teacher. The number of hours she worked varied, depending on how many children at the school wanted music tuition.
Under the Working Time Regulations, she was entitled to 28 days’ paid holiday which she could only take during school holidays. Mrs Brazel received a lump sum at the end of each term for her holiday pay, based on the previous term’s earnings.
Calculating holiday entitlement and pay for individuals with varying work hours can be difficult. Acas recommends calculating a casual worker’s holiday entitlement by saying that a worker accrues holiday at the rate of 12.07 per cent of the hours worked. This figure is worked out on the basis that someone who works all year round works for 46.4 weeks of that year and spends the remaining 5.6 weeks on holiday (5.6 weeks is 12.07 per cent of 46.4 weeks). The employer used this formula to calculate Mrs Brazel’s holiday pay.
Mrs Brazel made a claim to the employment tribunal, arguing that she had been underpaid for her holiday pay. The Working Time Regulations set out that holiday pay for workers with irregular hours should be calculated using an average from the previous 12 weeks’ earnings. For Mrs Brazel this meant she was better paid for her holiday (17.5 per cent of annual pay), compared to someone who worked all year round (12.07 per cent of annual pay).
The Court of Appeal found that even though she was better off than full-year workers, this was the correct method for ‘part-year workers’ like Mrs Brazel.
The Supreme Court has allowed the employer to appeal, and we will watch out for the result as this decision may result in claims for underpaid holiday. In the meantime, we can review how you calculate holiday pay for workers on zero-hour and part-year contracts and advise you how best to manage the risks.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.