Term-Time Only Worker's Contractual Terms Entitled Her to National Minimum Wage for Unworked Hours in School Holiday Periods
The Employment Appeal Tribunal (EAT) has provided a useful demonstration of the practical impact of engaging a low-paid term-time only (TTO) worker on a year-round contract.
What Were the Facts of the Case?
In the case of Lloyd v Elmhurst School Limited, Ms Lloyd was employed as a learning support assistant. She worked 21 hours across three days a week, on a TTO basis. Her salary was paid in 12 equal monthly instalments. Her employment contract stated she was entitled to 'usual school holidays' as 'holiday with pay'.
Ms Lloyd only worked during school term times, despite her contract stating that some work might fall in holiday periods. She brought a claim for unlawful deduction from wages under the Employment Rights Act 1996, arguing she had not been paid the National Minimum Wage (NMW).
What Did the Tribunal Decide?
The Employment Tribunal dismissed Ms Lloyd's claim. It considered that her basic hours for NMW purposes should be calculated based on Ms Lloyd's TTO hours plus her statutory holiday entitlement. It considered that the balance of the school holiday period did not form part of her basic hours for NMW purposes.
Ms Lloyd appealed to the EAT.
What Was the EAT's Decision?
The EAT upheld Ms Lloyd's appeal and remitted the case to a new Employment Tribunal for determination. The Tribunal had been wrong to focus on the hours Ms Lloyd actually worked, given that her contract of employment contained the right to take all school holidays as holiday with pay. For NMW purposes, basic hours can include periods of absence for which salary is due.
What Can Employers Learn from this Decision?
This decision demonstrates the practical impact of engaging TTO workers on 'year-round' contracts which contain an entitlement to all school holidays as holiday with pay. As an employer, if you create a contractual entitlement to paid holiday in excess of the statutory minimum, you will need to ensure the worker is in receipt of NMW for all their working hours plus their holiday time. This is more likely to be an issue for lower paid TTO workers.
Our standard salaried TTO contracts contain the right to pay for the requisite number of working weeks, plus the necessary number of holiday weeks (currently 5.6 weeks if the organisation provides statutory holiday only). The total amount forms the worker's salary and this is then averaged out and paid in 12 equal monthly instalments. Using this contractual model, the balance of the calendar year is then effectively spent on un-paid leave, for which there is no entitlement to pay.