The government last week issued a consultation document on how holiday pay should be calculated for part-year workers, such as term-time workers who work for part of the year.
This follows the decision of the Supreme Court last year in Harpur Trust v Brazel (weekly LELR 787) which held that the statutory entitlement to 5.6 weeks holiday cannot be reduced as a proportion of full-time hours to take into account weeks when they are not required to work.
Instead, the court held that permanent part-year workers were entitled to 5.6 weeks leave under the Working Time Regulations 1998. It also held that pay for that leave must be calculated on the basis of average earnings over a 52-week reference period, ignoring any weeks for which they were not paid. This is in accordance with the legislation which sets out how a week’s pay is calculated.
The government now wants part-year workers and workers with irregular hours to only receive annual leave and pay as a proportion of the hours worked. As a result, it is proposing to change the law so that holiday entitlement for part-year workers would be calculated as a proportion of the time they spent working in the previous 52 weeks. Crucially, the 52-week reference period would include weeks when no work was done.
It also proposes that agency workers’ holiday entitlement should be calculated as 12.07 per cent of the hours they work over the previous month (representing the proportion of statutory holidays an ordinary full-time worker receives over the working year). This would effectively mean that agency workers would accrue leave on a month-by-month basis, and so would not accrue leave between assignments.
The driving force behind these proposals is that in some cases a part-year worker may receive holiday pay which is higher as a proportion of earnings than a full-time worker. The Supreme Court considered a “slight favouring of workers with a highly atypical work pattern is not so absurd as to justify the wholesale revision of the statutory scheme”. It seems that the government does not agree.
The consultation closes on 9 March 2023 and the government will publish its response “in due course”.
To read the consultation document in full, click here.