On 20 July 2022, the Supreme Court handed down a landmark judgment in the case of Harpur Trust v Brazel, ruling that employees that only work for part of the year, such as term-time workers, are entitled to the same minimum level of paid annual holiday leave as employees working all year.

Facts of the case

The case was brought by Mrs Brazel for unlawful deductions from wages due to the underpayment of her entitlement to holiday pay. Mrs Brazel was employed as a music teacher under a permanent contract on a zero-hours basis and was required to take her annual leave during school holidays as she worked during term-time. The Trust made 3 annual payments in respect of her leave in April, August and December and this was calculated at 12.07% of her earnings in the preceding term. Mrs Brazel argued that this resulted in her being underpaid and instead her holiday pay should have been calculated using her average earnings over a 12-week reference period. This would mean that she should have received the same holiday pay as a full-time employee who worked all year round.

An Employment Tribunal rejected Mrs Brazel’s claim and agreed with the Trust that a part-time worker who works for only part of the year should have their holiday entitlement pro-rated to reflect the weeks that they actually worked.

The Employment Appeal Tribunal allowed Mrs Brazel’s appeal against the Tribunal’s decision and ruled in her favour, holding that her holiday pay had been miscalculated by the Trust. This decision was then appealed by the Trust, who argued that holiday pay could be calculated on a pro-rata basis to reflect the fact that a part-year employee worked fewer weeks a year compared to a full-year employee. The Court of Appeal dismissed the Trust’s appeal. In 2019, the Trust appealed to the Supreme Court.

Supreme Court finding

The Supreme Court unanimously dismissed the Trust’s appeal, holding that the amount of leave to which a part-year worker under a permanent contract is entitled must not be pro-rated to be proportional to that of a full-time worker. This means that holiday pay for part-year employees should receive the same holiday pay as staff who work all year round, and must at least meet the statutory minimum entitlement under the WTR.

It should be noted that legislation has been updated since this case began, and the reference period was increased from 12 weeks to 52 weeks to ensure that holiday pay more fairly reflects average pay for workers whose pay varies across the year

Implications

The scenario of employing a worker permanently for only part of a year occurs commonly in the education and local authority sectors with term-time-only working of teachers, teaching assistants, cleaning and facilities staff. However we sometimes see it in the leisure sector where employees are employed permanently but just to work during particular seasons.

The decision means that these part-year workers will need to receive the same holiday pay as staff who work all year round rather than pro rate holiday entitlement to reflect the number of weeks employees work each year. Remember this is different to part-time workers who work all year whose holiday can be pro-rated (which does feel illogical).

Going forward, for part-year workers holiday leave must be calculated using the 52-week reference period method as this is the method specified by legislation.

In the meantime, employers may wish to reconsider the circumstances in which they make use of permanent contracts for certain types of workers if they only work part of the year. Employers who do permanently engage part-year workers will also need to assess the holiday pay previously paid and consider any liability and how they may wish to tackle this. Generally back pay for holiday pay can be claimed for two years.

If you require any assistance on this issue, or have any other questions, please contact a member of CG’s Employment Team.