There has been legal wrangling ongoing since 2015 in relation to holiday pay for term-time employees. The case is known as Harpur Trust vs Brazel and the final legal judgement came through from the Supreme Court on 20th July 2022.
The judgment states that all staff on a permanent contract, including part-time staff, are entitled to 5.6 weeks holiday a year, regardless of how many weeks they work. This judgement covers anyone on a permanent contract who do not work the entirety of the year.
This means that the judgement will affect:
**Staff on part-time contracts – staff must receive the same amount of paid annual leave as those working a full year. From what I have read, this includes term-time only, casual and zero hours staff (see useful articles at the end of this blog).
**Employers – if you have previously calculated holiday pay on a pro rata basis using the ACAS advised percentage of 12.07% you will have to update the way you pay holiday pay immediately and you could be liable for claims of underpayment. This is because staff might have received less than the legal holiday entitlement.
Note that this judgement does not affect full-time contracts because those staff already receive 5.6 weeks paid holiday a year.
What does this mean?
Experts (see useful articles below) advise that the judgement provides clarity and will be of value to term-time employees whose working patterns do not fit the traditional full-time model. However, while this is a positive judgement for term-time employees, it might impact negatively on employers who have previously pro-rated holiday entitlement for part-time staff and will now have to pay the full 5.6 weeks a year, even for part-time staff who might only work a few hours a week or a few weeks a year.
Also note that some experts suggest this is one of the few times when a part-time worker might be treated more favourably than a full-time worker and some note that this judgement might lead to more employees requesting part-time working hours.
What do you need to do next?
**Review your contracts for part-time staff and check they state the correct holiday pay entitlement – 5.6 weeks statutory paid holiday for all staff (20 days / 4 weeks plus 8 days / bank holidays).
**Amend current methods of calculating holiday pay, if you have used the ACAS 12.07% method previously, so you are paying your staff the correct amount.
**Check your current staffing budget to ensure you can afford any additional holiday pay that will be owed to part-time employees.
**Risk assess the potential for any claims for back-pay from staff who have been incorrectly paid and ensure you have the funds to pay them. Note the advice in the article from Halborns.com below – ‘if you’ve previously used the 12.07% method, it’s possible to minimise the potential for claims of unlawful deductions from pay by immediately starting to pay workers’ holiday entitlement as set out above. This stops the ‘claims clock’ at that point, with the time limit for litigation running out three months after.’ Also note the TES article which states that providers, ‘may also face claims for back pay in respect of any underpayment of holiday pay going back up to two years.’
**Ensure staff pay slips clearly detail their hours worked, salary and 5.6 weeks holiday pay at staff member’s the usual rate. You will find more information about what must be detailed on a payslip from ACAS here – https://www.acas.org.uk/payslips.
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Useful articles
I have taken information from the following articles when writing this blog (08.2022):
Halborns.com article –
https://www.halborns.com/new-holiday-pay-case/.
TES article (but I found the bit about part-time vs part-year workers a little confusing) –
https://www.tes.com/magazine/leadership/hr/how-schools-should-calculate-holiday-pay-part-year-workers.
Farrer.co.uk article (clarifies part-year) –
https://www.farrer.co.uk/news-and-insights/blogs/harpur-trust-v-brazel-paid-holiday-for-part-year-workers-cannot-be-pro-rated/.
People Management article –
https://www.peoplemanagement.co.uk/article/1793748/part-year-workers-entitled-full-time-paid-holiday-allowance-supreme-court-rules
Reported in the Guardian –
https://www.theguardian.com/law/2022/jul/20/uk-part-year-workers-entitled-to-full-paid-annual-leave-court-rules
A PDF of the Harpur Trust vs Brazel judgement –
https://www.supremecourt.uk/cases/docs/uksc-2019-0209-judgment.pdf.
Photo credit: Personnel Today on Google Images.
Please note: I am not an expert in staff wages. I am using best information available at the time of writing to put together a blog to support colleagues. If you are unsure about what to do next – or you use 12.07% to calculate holiday pay and you are not sure how to change it – or staff approach you with questions you cannot answer – and you do not have a payroll advisor / accountant to speak to, I suggest you contact ACAS for more guidance.
Thank you.