Monday 23rd January 2023
On the 12 January 2023 the Department for Business, Energy & Industrial Strategy launched a Consultation on the impact of the Supreme Court judgment in Harpur Trust v Brazel in relation to holiday entitlement for part-year (including term-time only) and irregular hours (including casual and zero hours) staff. The Consultation includes Government proposals for legislation addressing Harpur, including that schools and other employers should be able to calculate holiday entitlement using the 12.07% method in order that holiday entitlement and pay is proportionate to the amount of work that staff actually perform each year.
The Consultation is open until 9 March 2023. We recommend all schools and academies respond to the Consultation. In addition, Stone King will be responding to the Consultation as a stake holder - representing employers’ interests and we invite schools/Trusts to complete our short survey to enable us to provide to the Government a comprehensive response to the proposals that sets out the impact the decision in Harpur has had on schools/Trusts.
The judgment held that part-year workers are entitled to 5.6 weeks of statutory annual leave (as a minimum) calculated using a holiday entitlement reference period to determine their average weekly pay, ignoring any weeks in which they did not work. As a result of this judgment, part-year workers are now entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year.
In effect, the judgment confirmed that holiday entitlement for part-year and irregular hours workers should not be pro-rated (using the 12.07% method).
For schools this has impacted how holiday for term-time only and causal staff, including exam invigilators, is calculated and resulted in schools needing to check holiday for these staff, and in some cases top up entitlement, to ensure staff receive at least 5.6 weeks holiday entitlement.
Until Harpur many employers pro-rated the contractual holiday entitlement for term time only staff to reflect the number of weeks they worked and the 12.07% method was widely used to calculate holiday for irregular hours (casual and zero hours) staff. The 12.07% derives from the fact that the standard working year is 46.4 weeks (that is, 52 weeks less the statutory 5.6 weeks holiday entitlement) and 5.6 weeks is 12.07% of 46.4 weeks. By multiplying the number of hours worked by 12.07%, schools were able to calculate holiday entitlement proportionate to hours worked across a year.
The consequence of this judgment, when comparing affected staff to part-time staff who work the same number of hours across the year but on a regular basis is that term time only staff are entitled to more holiday. And in the extreme, in relation to causal staff like exam invigilators who may only work a small number of weeks a year, Harpur means they may receive more pay in holiday than in their actual pay for work done.
In its Consultation, the Government aims to address these matters to ensure that holiday entitlement for staff is proportionate to the time they spend working.
The Consultation makes a number of proposals, the key one being:
To allow employers to calculate holiday entitlement for the year, at the start of a leave year, by multiplying the total number of hours worked in the previous 52 weeks (in effect the school’s previous leave year, which includes weeks not worked) by 12.07%. The result will mean that staff will receive holiday entitlement and pay, proportionate to the time they spend working.
This proposal differs to what was confirmed in Harpur in the following key way, Harpur confirmed that all staff regardless of weeks and hours worked, were entitled to 5.6 weeks holiday. The Consultation proposal is that staff will be entitled to a pro-rata equivalent of 5.6 weeks holiday per year calculated at the start of the leave year by multiplying the total number of hours worked in the 52 weeks prior to the start of the school’s leave year (including weeks not worked e.g. school holidays) by 12.07%.
The Consultation also makes proposals for calculating holiday entitlement for irregular hours staff (causal and zero hours staff, for example exam invigilators) during the first year of employment, for calculating the amount of holiday used by taking a particular day off, and for calculating holiday entitlement for agency workers.
In relation to calculating holiday entitlement for irregular hours staff (causal and zero hours staff, for example exam invigilators) during the first year of employment, the Consultation proposes that the method used should be similar to the method used for calculating holiday entitlement in the first year of employment for staff on regular hours (staff usually receive a 1/12th of their leave entitlement at the start of each month). The Consultation proposal is to calculate, at the end of each month, actual hours worked and multiply this by 12.07% to find holiday entitlement for the upcoming month. After the first year, the previous year could be used to calculate holiday for the next year.
The Consultation paper includes worked examples, which clearly set out the proposals.
The aim of the Government’s Consultation is:
- to understand the implications of the Harpur judgment on different sectors; and
- to ensure that any changes do not have any adverse impacts on other parts of the legislation.
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