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Calculating Holiday Pay for Term Time Workers

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Should holiday entitlement for ‘part-year’ workers (e.g. a visiting music teacher) be calculated on a pro rata basis at 12.07% of annual pay under the Working Time Regulations?

No, held the Court of Appeal in The Harpur Trust v Brazel.

The Claimant is a music teacher in permanent employment but working term-time only, on irregular hours around 32 weeks per year. The EAT held that her holiday pay should be calculated based on a 12-week average of hours worked, making, on her hours, holiday pay around 17.5% of annual pay, rather than 12.07% for staff working a whole year (based on 5.6/46.4 weeks).

The Court of Appeal declined to overturn the EAT’s judgment, coining the term ‘part-year worker’ for those employed all year round but not working the whole year. The Court rejected the School’s argument that a pro rata principle should be applied the accrual of leave for ‘part-year workers’; EU law did not require leave to be reduced pro rata, and it wasn’t necessary to apply a pro rata principle to the accrual of leave under the Working Time Regulations.

The Court noted that not applying the pro rata principle could lead to anomalous results if ‘part-year workers’ worked a few weeks a year but still had 5.6 weeks leave per year, but if employers take on such staff on permanent contracts (e.g. due to Disclosure and Barring checks), who would not get the benefit of more leave, the advantages of permanent employment may come with additional costs in holiday pay, which wouldn’t apply to freelancers. The Court noted that the circumstances of part-year workers may vary widely (from offshore oil rigs to education), and the approach in this case is straightforward and should be followed.

Thanks to Ed McFarlane of Deminos HR for preparing this case summary.