Facts

Ms Brazel works as a music teacher for the Harpur Trust. She is employed under a permanent contract and only works during term time. Her hours of work depend on the number of pupils requiring tuition. Ms Brazel is contractually entitled to 5.6 weeks’ holiday, but the contract did not expressly state that her holiday entitlement should be pro-rated.

The Trust pay Ms Brazel on a monthly basis according to the number of hours worked in the previous month, but she is paid her holiday pay at the end of every term. When calculating Ms Brazel’s holiday pay, the Trust followed Acas guidance on casual workers by using the rate of 12.07% per hour worked. Ms Brazel argued that was not the correct calculation under the Working Time Regulations and produced a lower figure. She disagreed that her holiday pay should be pro-rated simply because she did not work a full year.

Ms Brazel’s claim for unlawful deduction of wages failed in the Employment Tribunal, but her appeal to the Employment Appeal Tribunal was successful. The Trust appealed to the Court of Appeal.

Court of Appeal

The question for the Court of Appeal to decide was, by which method should Ms Brazel’s payments for annual leave be calculated?

The Court of Appeal coined a new term to describe employees in Ms Brazel’s situation – “part-year workers”. The Court felt that it was not apt to call such employees “term-time workers” as that denoted employees who are only employed during the term, while Ms Brazel was employed all the year round, albeit she only worked during term time.

Importantly, the Court decided that the position of a part-year worker such as Ms Brazel was not the same as a part-time worker, so there was no need to apply pro-rating as one would with the latter type of worker. This meant Ms Brazel’s holiday pay should be calculated by first determining a week’s pay – her average weekly remuneration during the previous 12 weeks – and then multiplying that figure by 5.6. This would make Ms Brazel’s holiday pay 17.5% of her actual earnings as opposed to the 12.07% rate used by the Trust.

The result is that a part-year worker will get higher holiday pay than a full-year worker, but the Court did not consider this to be “unprincipled or obviously unfair”:

“the actual days from which they will be relieved, and the quantum of their holiday pay, will reflect their actual working pattern.” Court of Appeal

Comment

This case will have implications for employers of part-year workers, such as teaching institutions, as these workers may complain about the size of their holiday pay or bring claims for unlawful deductions. There is some comfort for employers that such claims have a retrospective limit of two years.

Any employers who currently use the 12.07% rate to calculate holiday pay for permanent part-year workers would do well to review their employment contracts and assess their potential litigation exposure. The benefit of moving to calculate holiday pay on the basis of a week’s pay is that it starts the clock running for the three-month limitation period that applies to an unlawful deductions claim. However, the Trust has indicated that it may seek permission to appeal the decision to the Supreme Court, so some employers may prefer to take a “wait and see” approach and continue applying the 12.07% rate in the hope that an appeal is decided in the employer’s favour.