Holiday pay for workers - 2022 calculation
After years of legal battles extending through the entirety of the UK Justice System, the Supreme Court has (finally) ruled that workers that only work part of the year (such as term-time workers, and casuals) are entitled to the same holiday pay as colleagues working all year.
The case of The Harpur Trust vs Brazel is one that has had employment lawyers, HR experts and businesses alike on tenterhooks for years. Ok, so we’re being a bit dramatic; but the decision of the Supreme Court is hugely important and will have significant financial repercussions for employers who engage workers that only work part of the year.
Historic holiday pay
Many employers have historically paid for holiday taken by part-year workers using the “12.07%” methodology; in other words, taking the total hours worked across a particular period (i.e. a month), multiplying that by 12.07% and then paying that many hours at the usual hourly rate.
Ms Brazel was a music teacher on a term-time only contract. She was entitled to 5.6 weeks of annual leave a year, which she took in three blocks of 1.87 weeks – taking a period of holiday in each of the winter, spring and summer school holidays.
Her employer, The Harpur Trust, adopted the 12.07% methodology when it came to paying her for holiday taken. Ms Brazel argued that was incorrect, and that instead she should have been paid at the rate of 1.87 x her average weekly pay for each period of holiday; which amounted to significantly more holiday pay than she received using the 12.07% methodology.
The Supreme Court ruling
The Supreme Court agreed with Ms Brazel, and has now issued guidance on how holiday pay should be calculated for casual and part year workers / employees:
Holiday pay calculation for casual and part time workers / employees
- An employer should first calculate the average weekly pay in the 52 week period immediately prior to the period of holiday taken. This involves totalling pay received throughout the last 52 weeks in which work was performed (i.e. weeks in which no work was performed and no pay was received should be discounted), then dividing that total by 52;
- The weekly average should then be used to pay the worker for each week of their 5.6 weeks of holiday taken.
For example: if the worker takes a period of 2.5 weeks as holiday then they would receive 2.5 x the relevant average weekly pay for the reference period immediately prior to the dates on which the leave is taken.