The Supreme Court confirms how to calculate holiday pay for zero-hours workers

Caroline Cobain
Caroline Cobain
Legal Director
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The Supreme Court has issued an important judgment on calculating holiday pay in the case of Harpur Trust v Brazel. This case involved a music teacher, Ms Brazel, who was employed on a permanent contract but on a zero-hours and term-time only basis.

Ms Brazel raised a claim at the Employment Tribunal (ET) in 2015 for unlawful deductions. Her claim arose as her employer changed the way in which it calculated her holiday pay so that it was based on 12.07% of the hours she worked during term-time, calculated at her normal hourly rate. This change resulted in her receiving less holiday pay than she did previously and less than she considered she was entitled.

The 12.07% method, commonly used in the past for calculating holiday entitlement and pay of zero hours workers, is based on the understanding that out of 52 weeks in any year, a worker with the minimum statutory holiday entitlement can spend 5.6 of those weeks on holiday, leaving 46.4 weeks per year to be worked. The proportion of weeks spent on holiday vs weeks spent working is therefore 12.07% (5.6/46.4). This had been the method recommended by ACAS at the time of Ms Brazel’s original claim.

Ms Brazel’s claim did not succeed at the first instance. However, the case was appealed to the Employment Appeal Tribunal and then to the Court of Appeal, both of whom sided with Ms Brazel. Harpur Trust then made a final appeal to the Supreme Court in 2021.

The Supreme Court found in Ms Brazel’s favour and put to bed a long-contested question over whether the 12.07% method is lawful or not, with many having taken the view in recent years that it is not compliant with the Working Time Regulations.

In coming to its decision, the Supreme Court confirmed the following:

  • All workers (no matter their full-time, part-time or part-year status) are entitled to 5.6 weeks’ annual leave per year;
  • The amount of leave a worker is entitled to per year should not be pro-rated based on the portion of the year when work is actually done;
  • Annual leave must be paid and the method for calculating that pay is set out in the Employment Rights Act 1996 (ERA), as amended;
  • The rules within the ERA which apply to workers with “no normal working hours” apply to zero-hours workers and so, for them, average earnings must be used to calculate holiday pay.

In our view, it is now unsafe for any employer to use the 12.07% method. Instead, employers should ensure that all employees are given a holiday entitlement which is no less than 5.6 weeks per year (which can include public holidays), even if they do not normally work the full year. A week’s holiday pay for someone with fixed hours and pay should be based on their normal weekly salary. However, a week’s holiday pay for someone whose hours or pay fluctuates from week to week, will in most cases be their average pay based on the 52-week period immediately before the holiday, disregarding any weeks without pay and using earlier weeks in their place.

For the avoidance of doubt, it remains lawful to pro-rate the amount of holidays a worker is entitled to if they commence or leave employment part-way through the year.

If you would like to discuss this case, or if we can provide any other support or assistance on any employment law matters, please do not hesitate to call us on 0141 331 5150.

The Supreme Court’s judgment can be found here.

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