VWV Produces Template Response to Part-Year Worker Holiday Entitlement Consultation
The Government is consulting on a proposal to change the way holiday entitlement works for permanently-retained part-year and irregular hours workers.
The consultation follows last year's high profile Supreme Court judgment in the Brazel case. Brazel confirmed that permanently-retained part-year and irregular hours workers are currently entitled to 5.6 weeks' statutory annual leave. It is not lawful to reduce holiday entitlement on a pro-rata basis in proportion to worked hours. The Government is aiming to change this by introducing the ability to pro-rate statutory holiday entitlement.
Given the importance of these proposals, we have produced a template response to the consultation. This template response is for use in confidence by VWV clients. You can access the template response on our free OnStream portal by clicking here. Please do not circulate the template beyond key colleagues in your HEI.
Summary of Government Proposals
The Government is proposing to introduce a new, fixed 52 week 'holiday entitlement reference period' ('New Entitlement Reference Period') for part-year and irregular hours workers. Under the New Entitlement Reference Period, the worker's holiday entitlement would be 12.07% of their total worked hours for the previous holiday year. At the start of one leave year, the worker's holiday entitlement would be calculated based on their working hours over the last 52 weeks.
Our experience from working with HEIs impacted by this judgment is that we would support a change in legislation to ensure that holiday pay and entitlement received by workers is proportionate to the time they spend working. The first main aim of the template response is to support the proposal to ensure a method of calculating holiday entitlement and holiday pay for part-year and irregular workers which is fair and proportionate.
The consultation looks at how this might be achieved and it is important to ensure that the proposals do not have a negative impact on HEIs due to complexity or impracticality.
At first glance, the Government's proposals seem like a fair way of remedying the impact of the Brazel judgment. If confirmed, holiday entitlement for part-year and irregular hours workers will correspond with their working hours. As a result the holiday pay of part-year and irregular hours workers will also be automatically adjusted.
However, we think that some of the detail of the proposal has the potential to cause the following unintended consequences and complications:
- Permanently-retained part-year workers with fixed hours such as term time only staff ('Salaried Workers') appear to be included within the scope of the consultation. It is currently straightforward to calculate holiday entitlement (and pay) for these workers. If the New Entitlement Reference Period is confirmed and applies to Salaried Workers, it will become much more complicated to calculate their holiday pay, and therefore their salaries. The second main aim of this template response is to ensure the Government considers the impact of its proposals on Salaried Workers. Our recommendation is that if holiday entitlement is to be pro-rated, the pro-rata entitlement should be calculated for Salaried Workers based on the current holiday year, given that their working hours will be known in advance. We suggest that the holiday entitlement of Salaried Workers could simply be 12.07% of the current year's working weeks
- The New Entitlement Reference Period will not alter or remove the current reference period HEIs must use to calculate the amount of a 'week's pay' for workers with variable hours or pay, such as hourly paid lecturers ('Holiday Pay Reference Period'). There will be a practical implication of introducing the New Entitlement Reference Period to sit alongside the existing Holiday Pay Reference Period. HEIs will need to start using both reference periods, which will work differently as follows:
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- The New Entitlement Reference Period will include unworked weeks, whereas the Holiday Pay Reference Period excludes unpaid weeks and replaces these with paid weeks going back a maximum of 104 weeks.
- The New Entitlement Reference Period is proposed to be a fixed reference period based on the last holiday year. The Holiday Pay Reference Period is a rolling reference period based on the last 52 paid weeks.
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This has the potential to be confusing and complicated, particularly for employers of irregular hours workers. In our view, the Government could achieve its aims by dropping the New Entitlement Reference Period, and instead changing the way the current Holiday Pay Reference Period works. The third main aim of this consultation is to ask the Government to consider this alternative approach, which we consider could lessen the administrative burden on HEIs.
What Should You Do Now?
- Finalise and submit your HEI's response
Given the significance of the proposal, our recommendation is that you should respond direct to the consultation on behalf of your HEI. Please do review the template response we have prepared, which is intended to be completed and submitted by you. Our template response reflects the three main points we have summarised above. If you disagree with our views on these points, you should amend the template responses in order to ensure they accurately reflect the position and views in your HEI.
When you have finalised your responses to the questions below, please respond to the consultation by clicking here. You will need to copy and paste the answers below into the web browser.
The consultation closes at 11.45pm on 9 March 2023.
- Help us finalise our VWV response
Given our expertise in the area of holiday pay for part-year and irregular hours, and in light of our work on the Brazel case, we will also be submitting a consultation response on behalf of the firm. Our response will reinforce the main points we have highlighted above. If you have any views you would like us to take into account for the purposes of our firm-wide response, please submit these by email to Jessica Scott-Dye at jscott-dye@vwv.co.uk by Friday 3 March 2023.