Member Article

The Supreme Court has handed down its decision in the claim of Harpur Trust v Brazel, which may have a significant impact on employers of part-year workers.

Background

Under the Working Time Regulations (“WTR”), workers are entitled to a minimum of 5.6 weeks’ annual leave and to be paid holiday pay at a rate of a week’s pay. Holiday pay for workers who do not have normal working hours is based on average weekly pay during the 52-week period immediately preceding the start of their holiday, discounting any weeks where they did not receive pay.

Before the Brazel case, it was a grey area for employers as to how holiday entitlement should be calculated for their permanent employees who do not work the whole year but have a contract which lasts throughout the year (“part-year workers”). The most common approach was to pro-rata holiday entitlement at 12.07% of hours worked. The Supreme Court, agreeing with previous decisions by the Employment Appeal Tribunal and the Court of Appeal, has clarified that this approach is incorrect.

Facts

Mrs Brazel was a part-year worker, working varying hours during certain weeks of the year but holding a permanent contract that continued throughout the year. She was entitled to 5.6 weeks’ paid annual leave (both under her contract and statute) which she was required to take during school holidays.

In September 2011, her employer changed the way it calculated Mrs Brazel’s holiday entitlement. Previously, she was paid for the holiday she was deemed to have taken, in three equal tranches in school holidays, and paid her average weekly pay over a 12-week reference period (being the correct reference period at that time under the WTR). From September 2011, however, Mrs Brazel’s holiday pay was calculated based on 12.07% of her total hours and paid at her normal hourly rate of pay. This resulted in her receiving lower holiday pay and she brought a claim for unlawful deduction of wages.

Mrs Brazel’s claim failed initially at the Employment Tribunal, but her appeal succeeded at the Employment Appeal Tribunal and the Court of Appeal.

Supreme Court’s decision

Her employer then appealed to the Supreme Court, who were asked to decide was whether Mrs Brazel’s leave entitlement under the WTR should be calculated on the same principle as full-time workers, or whether her entitlement to leave should be calculated ignoring the weeks she did not work and received no pay.

The Supreme Court rejected the employer’s appeal. It confirmed that Mrs Brazel should be paid a week’s pay for each of the 5.6 weeks’ leave to which she was entitled, with her pay being calculated using the average of the 12 preceding weeks immediately before holiday was taken (now 52 weeks).

Though it was recognised that this could put Mrs Brazel in a more favourable position than some full-time workers, in that the holiday pay she received could work out as a higher percentage of the total pay she received over the year than would apply to a full-time worker, this was not enough to move away from the clear statutory wording in the WTR. Although the WTR contain express provisions requiring weeks when workers who work irregular hours do not receive pay to be discounted when calculating their weekly pay, there was no such provision included in the WTR in relation to calculating their holiday entitlement.

Take-away points

Though the Brazel case relates to a worker in the education sector, the decision affects all employers who employ part-year workers. Employers should assess whether their approach to calculating holiday entitlement for such workers should change in light of this decision.

The decision may put part-year workers in a disproportionately beneficial position compared to full-time and part-time colleagues and it is to be seen whether Parliament will seek legislative reform to address this. Employers should keep a watching brief on any developments in this area.

 

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