Holiday pay for part-year and casual workers has never been easy. A recent case has confirmed that holiday pay rules have changed.
What were the rules before?
The rules on holiday pay aka annual leave used to mean that full-time staff were entitled to 5.6 weeks of annual leave (this bit hasn’t changed).
Some people found it challenging to calculate 5.6 weeks holiday as a pro-rata calculation for staff who worked part of the year or irregular hours. So, it became widely accepted that employers could calculate accrued annual leave based on 12.07% of hours that staff actually worked.
Why did a change happen?
A part-time music teacher by the name of Mrs Brazel challenged the old calculation. Mrs Brazel only worked during term time and she had to take her annual leave during the school holidays even though she was on a zero-hours contract.
Mrs Brazel’s employer (The Harper Trust) had used the 12.07% calculation. Mrs Brazel did not think this was fair. She believed she should receive holiday pay based on her normal rate of pay excluding school holidays.
An Employment Tribunal disagreed with Mrs Brazel. Mrs Brazel appealed in the Employment Appeal Tribunal and they reversed the decision. However, an appeal was made in the Supreme Court which confirmed the holiday pay calculation of 12.07% was incorrect.
What is the Law on holiday pay now?
The Supreme courts decision on 20th July 2022 is now Law.
The outcome is that all staff whether they are full-time, part-time, part-year or zero-hour workers are entitled to 5.6 weeks of annual leave.
A week of annual leave will be calculated using the last 52 weeks of the year.
This does mean that some part-year workers and irregular hour workers will receive more holiday entitlement.
Who does this affect?
This will have an impact on all businesses that use staff for irregular hours.
Some obvious industries will include, teaching and education as well as tourism and hospitality.
We are encouraging businesses to :
- Check and amend employee contracts and worker contracts to ensure they are compliant with Employment Law.
- Check calculations when staff are taking holiday pay.
- Notify staff about this change.
For more information on Employment Law, Employment Contracts or any HR matter contact us at www.orchardemploymentlaw.co.uk