Holiday Entitlement and Pay for Part-Year and Irregular Hour Workers

A quick re-cap…

You will recall we saw the Harpur Trust and Brazel case reach the final stage in the court process in July 2022, when the Supreme Court held that part-year workers are entitled to 5.6 weeks’ paid annual leave per year without any element of pro-rating to reflect the time when the individual did not carry out any work; and the correct method of calculating holiday pay for such workers should be based on average pay, ignoring weeks where an individual does not earn anything. This decision meant part-year workers were not only entitled to proportionally more holiday entitlement than full-time and part-time workers, but also in relation to holiday pay.

Given the Supreme Court is the final court of appeal in the UK, the only avenue for this irregularity and ambiguity to be resolved was for the government to step in and propose legislative changes.  In a positive move the government did just that and it issued a consultation paper; ‘calculating holiday entitlement for part-year and irregular hour workers’ seeking to propose new legislation, which, could effectively reverse the position left by Brazel. The consultation sought views on introducing a 52-week holiday entitlement reference period, as well as calculating holiday entitlement using the accrual method, that being the method of 12.07% of hours worked in a pay period.

The Government also undertook a second consultation on Retained EU Law, which also included proposals on holiday pay and entitlement; this consultation specifically focused on whether a single annual leave entitlement of 5.6 weeks should be introduced, and also whether ‘rolled-up’ holiday pay (that is where a worker receives an enhancement with every payslip to cover their holiday pay, as opposed to receiving holiday pay only when they take annual leave) should be introduced for all workers.

What are the headline responses to the consultations?

• The Government will not proceed with proposals to introduce a 52-week entitlement reference period for irregular hour workers and part-year workers and instead will legislate to introduce an accrual method to calculate entitlement at     12.07% of hours worked in a pay period in the first year of employment and beyond – as was sector practice prior to Brazel.
• The Government will not be introducing a single annual leave entitlement, and will maintain the 2 distinct ‘pots’ of annual leave and the 2 existing rates of holiday pay so that workers continue to receive 4 weeks at normal pay and 1.6 weeks at basic rate of pay.
• The Government will introduce rolled-up holiday pay but for irregular hour workers and part-year workers only.

What’s next?

As many of the changes will need to be implemented by way of legislation, there are currently no implementation dates provided, and we are awaiting further guidance and documentation from the Government about how these changes will work in practice.

In the meantime we will be working to provide all our school customers with more detailed guidance. For Kent Maintained Schools and Academies which follow Kent Scheme Terms and Conditions will also be will also be liaising closely with the Local Authority regarding any implications for the holiday pay calculations which are currently used.