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Term Time Only Staff Holiday Entitlement: Are You Prepared for the Supreme Court Judgment?

on Tuesday, 17 May 2022.

The Supreme Court judgment in the case of The Harpur Trust v Brazel (Mrs B) is expected to be released in the coming weeks/months. This highly anticipated judgment will resolve the current uncertainty around term time only staff holiday pay entitlement.

It will be significant not only for independent schools, but also for the wider education sector and indeed for any employer of term time only, or part-year staff.

Given the case's high profile, we anticipate it will be reported in the legal press and the mainstream media. Your staff may question the impact of the judgment on them personally. To maintain the initiative and to be decisive, our recommendation is for schools to plan their strategic response to the Supreme Court judgment.

The Story So Far

Mrs B is a visiting music teacher employed under a zero hours term time only contract. She works variable hours according to fluctuating demand for music lessons.

Mrs B’s holiday pay is calculated with reference to the sector-standard 12.07% formula, which until recently had been promoted by ACAS, endorsed by the Government and widely accepted as the correct way to calculate term time only staff holiday entitlement.

The 12.07% figure represents the statutory holiday to which year round staff are entitled: 5.6 weeks statutory annual leave equates to 12.07% working time (the pro rating principle).

Mrs B’s claim is that the 12.07% formula bears no reference to the Working Time Regulations (Regulations), which for her category of worker simply require holiday pay to be calculated based on average weekly pay.

Calculating holiday entitlement in this way means that holiday pay for term time only staff will not be reduced to reflect part year working. Put another way, according to this argument, a part-year worker could work (say) three months of the year and still be entitled to a full 5.6 weeks’ annual leave and pay, ie the same holiday as a colleague working the whole year.

The Trust and the pro rating principle succeeded at the Employment Tribunal. The subsequent decision of the Court of Appeal is under consideration at the Supreme Court.   

The Supreme Court is considering whether the pro rating principle can survive the drafting of the Regulations, or whether a strict interpretation must be used to allow someone who only works part of the year, to receive the same holiday leave and pay entitlement as someone who must work the whole year round to achieve that same entitlement.

As a point of principle and logic, many would argue that if the Supreme Court upholds the Court of Appeal decision, this would result in an inequitable system where term time only and part-year workers would receive preferential treatment in comparison to those staff who work all year round. The case may ultimately prompt a legislative change in order to address the drafting of the Regulations. However any such change, if it does come, will not happen overnight and schools need to be aware of the potential impact in the interim. 

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Planning Your School's Strategic Response

If common sense prevails at the Supreme Court and the pro rating principle is approved, no changes will be necessary to term time only staff holiday pay calculations. However, if the pro rating principle is rejected, term time only staff and part-year workers may seek back pay to cover historic underpaid holiday. Schools will also have to consider their approach to holiday pay calculations going forward. There are some key steps schools can take in order to prepare for this eventuality.

  • The first task will be to determine an approach to back pay, including whether the school will offer back pay to affected staff, how much back pay will be offered, and when and how any offer would be made. Schools will need to decide whether to take a proactive approach to correcting underpaid holiday, or to wait for staff to raise it. Assessing back pay will involve calculating the difference between the holiday pay affected staff have received, and what they should have been paid, if their entitlement had not been pro-rated. The starting point is that claims for back pay will be limited to two years, although actual liability could be more or less than this depending on the circumstances and our recommendation would be for schools to seek advice on their individual positions.
  • Schools should also calculate the potential increased cost of term time only and part-year staff holiday pay going forward. Ways in which the increased cost might be partly or wholly absorbed should also be considered. Options might include increasing the cost of music fee tuition, or introducing a pay freeze for affected staff. There will of course be wider considerations for schools around how any such cost absorption measures could be received by staff and the wider school community.
  • Schools may also wish to give some thought to their ongoing use of term time only contracts. For example, for some categories of part year workers (such as exam invigilators) it might be appropriate to use discrete contracts, so the individual does not remain employed outside engaged time. Where discrete contracts are used in the right way, pay in lieu of accrued but untaken holiday can be paid on termination. The individual would not then continue to accrue holiday outside term time when they are not working for the school. Again, our recommendation would be to take individual advice before changing any contractual arrangements either with existing or new staff. This is in order to ensure that the correct process is followed where necessary, and also to confirm for which categories of staff discrete contracts might be used.  

There will inevitably be a financial cost to schools if the Supreme Court finds against the pro rating principle. However, the potential impact of the judgment extends further. By adopting a proactive approach in readiness for the publication of the judgment, schools have an opportunity to control the narrative presented to staff around the impact of the decision on their school's position. This will place schools in the best possible position to maintain positive staff relations, protect their reputation as fair employers, and plan adequately for the future to manage any cost increase.

For further information on staff holiday entitlement, please contact Simon Bevan in our Schools team on 07980 828 004 or complete the form below.  

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