The government has opened a consultation to address the complexity around holiday pay after last year’s Harpur Trust v Brazel ruling.
In July, the Supreme Court confirmed that part-year workers should receive 5.6 weeks’ statutory holiday pay.
This meant that any worker with a continuing contract throughout the year, but who only works for certain periods such as term time, must have their holiday pay calculated in the same way as employees who work the full year, rather than pro-rated.
The consultation opened yesterday (12 January) and will close on 9 March 2023.
The Department for Business, Energy and Industrial Strategy said the intention of the consultation was “to ensure that their holiday pay and entitlement is directly proportionate to the time they spend working”.
The consultation proposes introducing a 52-week holiday entitlement reference period, which would bring calculations in line with entitlements received by part-time workers who work the same number of hours across the year.
This period would include weeks in which workers did not work, such as teaching assistants who only work during term time.
It said that including unworked weeks would create an incentive for employers to give employees only a small number of hours a week, rather than none at all.
It also plans to simplify how entitlement is calculated, legalising the method whereby employers work out 12.07% of total hours worked across working and non-working weeks. Employers are asked how they currently calculate entitlement and whether implementing the suggested methods would work.
The original case centred on Ms Brazel, a visiting music teacher at Harpur Trust who was engaged on a zero-hours contract and worked during term time. She was only paid for the hours she taught, which varied week to week.
The number of hours she worked determined the amount of holiday she received, as the Trust calculated this by pro-rating the 5.6 weeks’ entitlement. She brought a claim, claiming the Trust’s approach meant she received less than she was entitled to.
The Court of Appeal and subsequently Supreme Court decided in her favour, ruling that because she was on a contract for the whole year she should be entitled to 5.6 weeks’ paid leave.
Employers must now adhere to this ruling, but the decision caused some confusion as to how they should deal with casual staff working part of the year and whether there would be entitlement to back pay.
Kate Palmer, HR advice and consultancy director at Peninsula, said the launch of the consultation showed that the government was acknowledging the “unintended anomalies” raised by the decision.
“The fact that the consultation period is only open for eight weeks suggests they are putting a high priority on resolving the issue quickly and introducing amendments,” she said.
“Effectively this could see part-year workers treated comparably to part-time workers in their annual leave entitlement.
“Under current laws, part-year workers can receive considerably more leave and pay than that of a part-time worker despite working the same number of hours in total over the course of a year.
“Any changes to current legislation will be particularly important for those in the education sector who commonly use term-time contracts. However, it could also pose a new HR headache for any employer who has zero-hours, variable-hours, or agency staff.
“Changing the law can be a lengthy process, but employers should continue to calculate and provide leave in line with the ruling in the Harpur Trust v Brazel case until we know the outcome of this consultation.”