Workers in Great Britain are entitled to a minimum of 5.6 weeks' annual leave under the Working Time Regulations 1998 (WTR), and are paid at the rate of a week's pay for each week of leave. This can be difficult to calculate for workers with no normal working hours, or who work for part of the year. In this case, the issue was how holiday pay should be calculated for Ms Brazel, a permanent employee who only worked for part of the year.
The WTR states that holiday pay should be calculated in accordance with the "week's pay" provisions of the Employment Rights Act 1996. Where a worker does not have normal working hours, a week's pay is taken to be the worker's average weekly pay in the twelve weeks before the leave starts, excluding any weeks in which no remuneration was payable.
Employed by the Harper Trust (Trust), Ms Brazel was a part-time music teacher on a permanent zero-hours contract working for a school. She provided 20 to 30 half-hour lessons a week during term time and was required to take annual leave during school holidays.
Her employer calculated her holiday pay pro rata at the rate of 12.07% of her hours worked (based on a standard working year of 46.4 weeks), so at the same rate that an employee would receive who worked throughout the year. She was paid in three separate payments after each term, calculated on 12.07% of her earnings in the preceding term.
Ms Brazell argued in the employment tribunal that if her "week's pay" was calculated under the ERA for a worker without normal working hours, her holiday pay would increase to about 17.5% of her earnings for the term. The tribunal rejected her claim but was it was upheld by the Employment Appeal Tribunal (EAT).
The Trust appealed to the Court of Appeal, which agreed with Ms Brazell's approach. Neither the EU's Working Time Directive nor the WTR required employers to pro-rate holiday entitlement of workers who work part of a year to that of full year workers. The Court confirmed that staff employed on a zero-hours contract, who may only work for certain parts of the year, are entitled to receive a minimum of 28 days' paid annual leave (5.6 weeks), based on the average payment for the preceding 12 weeks in which they received pay, if their pay is irregular.
The Court of Appeal made clear that this ruling applies to part year workers on irregular pay, rather than part time workers who have regular working patterns. It accepted that workers only working part of the year could receive a greater proportion of their annual earnings than full time workers.
Employers who engage workers on a permanent basis for part of the year, which may include zero hours arrangements, should check their approach to holiday pay calculations. Holiday pay should be calculated as an average of the previous twelve weeks pay (excluding weeks where no there was no payment), and then multiplying the total by 5.6. Workers for whom holiday has been pro-rated against full year workers may have claims for unlawful deductions going back up to two years.