Holiday pay ruling will have a big impact on the education sector
According to a leading HR specialist at Haslers Chartered Accountants, the Supreme Court’s decision in The Harpur Trust v Brazel could have serious financial implications for employers with staff working part of the year on permanent contracts – particularly those within the education sector.
This case involved music teacher Ms Brazel, who believed her holiday pay should be calculated using her average earnings over 12 weeks and not pro-rated to cover her work at a school operated by The Harpur Trust during term time.
During the case, Brazel said that she had lost out financially after the school altered its holiday pay calculations in 2012. Using the new system, the school calculated her earnings at the end of each term and took 12.07 per cent of that figure back.
It then paid Brazel her hourly rate for her number of hours as holiday pay based on the idea that 12.07 per cent is the proportion that 5.6 weeks of annual leave is compared to the total working year of 46.4 weeks.
Not only is this method of calculating pro-rated holiday pay common within many organisations, but it is also the same calculation previously recommended within official guidance from Acas (Advisory, Conciliation and Arbitration Service).
Despite this, Brazel said during earlier rulings that this means of calculating her holiday pay was not in line with the working time regulations and that holiday pay should be calculated by taking the average weekly remuneration for the 12 weeks before the calculation date and multiplying it by 5.6 to account for the proportion of annual leave given within a year.
An initial employment tribunal in 2015 dismissed her case, finding that The Harpur Trust had applied the correct method of calculating holiday pay. This decision was then overturned by an Employment Appeal Tribunal, which led the trust to launch a new case at the Court of Appeal in 2019.
This found that the working time regulations did not require leave for term-time workers to be reduced pro-rata and that holiday pay should be calculated using their average earnings over a 12-week period.
This final ruling at the Supreme Court unanimously ruled in favour of Brazel’s argument, deciding that she should receive the same holiday pay as staff who work all year round. The Court said that the method used by The Harpur Trust, and many other employers, were at odds with the statutory method set out in the working time regulations.
James Boden Head of HR at Haslers, said: “It is important for employers to remember to disregard weeks within the 52-week calculation where the person has not worked therefore extending the reference period to a maximum of 104 weeks.
“This latest case brings some clarity to the thousands of organisations in the UK who have pro-rated holiday entitlement to reflect the number of weeks employees work each year.
“Many other employers have been caught out by holiday pay rulings in recent years, creating a significant financial burden on their organisations. Such arrangements are fairly common within the education sector, so employers must act now to update their holiday pay calculations based on this decision.”
If you are unsure how this court ruling affects you or your organisation, please contact Haslers HR by emailing james.boden@haslers.com.
