The landmark judgement in the case of Brazel v The Harpur Trust
Another case and another decision by the Courts that ‘part year workers’ must receive the full 5.6 weeks statutory holiday and must have their holiday pay calculated by reference to their average weekly wage, not by a fixed formula.
The Facts of the Case
Ms. Brazel was employed by The Harpur Trust on a zero-hour contract to teach music during term time. Her contract stated that she was to take 5.6 weeks paid holiday during school holidays.
She had to submit time sheets each month to calculate the number of hours she worked each term, from which her holiday pay was calculated by applying the 12.07% formula.
The 12.07% formula comes from the statutory 5.6 weeks holiday entitlement being 12.07% of the working year (which is 46.4 weeks). This was previously recommended by ACAS as a way to calculate holiday pay for zero-hour workers, although this advice has since been removed.
Ms. Brazel consequently received holiday pay for a total of 12.07% of her accrued hours. This was paid at three intervals throughout the year: at the end of the Easter, Summer, and Christmas terms.
Ms. Brazel argued that this method of working out her entitlement meant that she had been underpaid by £1,360.72 over the course of three years. She argued that she was entitled to receive her “normal rate of pay”, which was higher than the holiday pay she had been receiving.
She then argued that the Trust should calculate her pay based on her previous 12 working weeks, not by using the fixed 12.07% formula.
Decision
The Employment Tribunal decided in favour of the Trust, however, when Ms. Brazel appealed against the judgement in the Employment Appeal Tribunal, the case was settled in her favour.
The Trust then appealed further to the Supreme Court, who ultimately decided in favour of Ms. Brazel.
The Supreme Court said that workers who are classed as ‘part-year’, (meaning that they remain employed by the employer for the full year, but only work for part of the year or work irregular hours) are still entitled to receive the statutory 5.6 weeks holiday per year.
Interestingly, they decided that this should not be pro-rated, as the employee remains under contract throughout the full year, even though they only work for part of it. Therefore, the Trust were calculating Ms. Brazel’s holiday pay wrong.
In summary, the Supreme Court decided that holiday pay should be calculated using the ‘averaging method’. This is where the employer calculates the employees average pay over the 52 weeks, ignoring any weeks where they did not earn anything. This should then be used to calculate a weekly average, which should be used for the 5.6 weeks holiday.
Impact
The Supreme Court did acknowledge that this system would give a slight favouring to part-year workers, as they would receive the full 5.6 weeks holiday unlike part time employees, who’s holiday would be pro-rated.
This could lead to extreme cases such as “… you could have a permanent employee who worked only one week of the year, for which he or she earned, say, £1,000, and who would then be entitled to 5.6 weeks (notional) annual leave, for which they would receive £5,600.”
However, the Supreme Court justified this by saying that the outcome was not so absurd as to justify revising the legal provisions for holiday pay.
This decision is likely to cause a big stir amongst employers, particularly those who employ workers on a casual basis, e.g term time workers and zero-hour workers. It won’t affect those who work part-time with set working hours each week, as their holiday will be calculated pro-rata compared to a full-time worker.
From now on, those who use the 12.07% method should re visit their methods to calculate holiday pay. If this affects you, you can contact our employment department on 01246 932 100 who will be able to advise you as to what this decision means for you and your business.
