Supreme Court Confirms Term-Time Only and Part-Year Workers are Entitled to Unreduced Statutory Holiday

The judgment has significant implications for employers of the following categories of staff:

• term-time only (or 'part-year') workers, who are retained on a year-round basis, but who spend part of the year not at work and not being paid, and whose holiday pay is reduced on a pro-rata basis accordingly
• staff with irregular working hours whose holiday entitlement is calculated using the 12.07% (or similar) multiplier

The Supreme Court has confirmed that due to the wording of the Working Time Regulations 1998 (Regulations), these workers are entitled to 5.6 weeks unreduced statutory holiday. There is no scope within the Regulations for employers to reduce their statutory holiday entitlement on a pro-rata basis in order to account for the fact that part-year workers do not work all year round.

In handing down its decision, the Supreme Court has acknowledged its judgment will favour part-year workers, who will now receive a proportionately higher amount of holiday pay in comparison to their year round counterparts.

Workers need to be paid for the 5.6 weeks' holiday entitlement based on their normal 'week's pay'. This calculation will depend on whether individuals have standard or variable hours, but use of a percentage approach (which is widely used and had been in line with former ACAS guidance) will no longer be legally compliant.

What Do Employers Need to Do in Response?

In light of the decision, employers are likely to need to review their contractual arrangements and holiday pay calculations for term-time only and part-year workers. If holiday pay has historically been underpaid, it may be necessary to pay up to two years' back pay in order to correct the underpayment. We can provide advice tailored to your organisation's specific circumstances as required.

We are in the process of reviewing the full judgment and will shortly provide a more detailed comment and FAQs.

For more information or advice, please contact Simon Bevan on 0117 314 5238 or Alice Reeve on 07741 271 363 in our Education team, or complete the form below.