Government Consults on Calculation of Part-Year Worker Holiday Pay
On 12 January 2023 the Government opened consultation on proposals to pro-rate statutory holiday entitlement for part-year workers, in light of last year's Supreme Court judgment in the case of Harpur Trust v Brazel.
What is the Significance of the Brazel Judgment?
The widely reported Brazel judgment confirmed that due to the wording of the Working Time Regulations (WTR), there is no mechanism which employers can use to reduce the statutory holiday entitlement of permanently retained part-year workers in proportion to the amount of the year they actually spend working. The impact of the judgment means that currently, a permanently retained part-year worker who works 30 weeks of the year will be entitled to the same 5.6 weeks' statutory holiday as their colleague who works on a year round basis.
At the time the judgment was handed down, the Supreme Court described the impact as amounting to "a slight favouring of workers with a highly atypical work pattern" which did not justify the "wholescale revision of the statutory scheme". This was in stark contrast to the views put forward by the Appellants. The Government appears to agree with the Appellants, estimating that the holiday entitlement of between 320,000 and 500,000 permanent term-time only and zero hours staff has increased as a result of the judgment.
What is the Focus of the Government Consultation?
The Government is consulting on the introduction of a holiday entitlement reference period for part-year and irregular hours workers which would ensure their holiday entitlement and pay is directly proportionate to the time they spend working. In its consultation document, the Government proposes to reinstate the 12.07% formula to calculate the holiday entitlement of part-year and irregular hours workers. Employers will be familiar with this formula as being the previously accepted approach which was supported both by ACAS and the Government, but which is not currently reflected in the WTR.
If the consultation results in a change to the law, this will both simplify holiday pay calculations for affected staff, as well as restore a sense of fairness around the issue more generally.
What Happens Next?
The consultation can be found here and is open until 11.45pm on 9 March 2023. The Government will publish its response to the consultation in due course after the consultation closes. In the meantime, the Supreme Court judgment remains in force and part-year and irregular hours workers remain entitled to 5.6 weeks' statutory annual leave. We recommend all schools take part in the consultation to support the Government's proposal.