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 does 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 which, at the time, recommended using the rate of 12.07% per hour worked (the “Percentage Method”). Ms Brazel argued that was not the correct calculation under the Working Time Regulations 1998 (“WTR”). 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 which dismissed the appeal. The Trust then appealed to the Supreme Court.

Supreme Court

The question for the Supreme Court to decide was, by which method should Ms Brazel’s payments for annual leave be calculated? This raised an important issue about the statutory leave requirement for “part-year workers” – permanent workers who work for varying hours during only certain weeks of the year.

The Trust put forward various methods for calculating holiday pay, including the Percentage Method and the “Worked Year Method”. The latter method takes account of the fact that Ms Brazel does not work during school holidays. It uses the number of weeks she actually works (34 weeks) to calculate a percentage of the full working year (46.4 weeks). That percentage is then applied to the annual leave entitlement applicable to the full working year.

The Supreme Court found that these alternative methods were problematic. Firstly, they were very different from the statutory method set out in the WTR. Secondly, the calculations were very complicated. The Court noted that the statutory scheme could produce odd results but that does not justify wholesale revision of the scheme.

Importantly, the Supreme Court decided that the “Calendar Week Method” represents the correct implementation of the WTR and is fully compliant with EU law. Ms Brazel is entitled to 5.6 weeks’ paid leave which is taken in 3 equal tranches during the winter, spring and summer school holidays. This means that 1.87 weeks of each school holiday was treated as annual leave for which Ms Brazel was entitled to be paid. Under the Calendar Week Method, Ms Brazel’s holiday pay is calculated by first determining a week’s pay – her average weekly remuneration during the previous 12 weeks – and that figure is then multiplied by 1.87 to get the holiday pay she is due for the 1.87 weeks’ leave she took during each school holiday.

The Supreme Court held that even if the Calendar Week Method results in Ms Brazel being entitled to a greater amount of leave than she might be strictly entitled to under the law, and to a proportionately greater leave requirement than a full-time worker, this approach is legally compliant.

“the amount of leave to which a part-year worker under a permanent contract is entitled is not required by EU law to be, and under domestic law is not, prorated to that of a full-time worker” Supreme Court

The Supreme Court dismissed the Trust’s appeal.

Comment

This decision brings to an end this long-running case. Employers of part-year workers, such as teaching institutions, now have definitive guidance on how to calculate their holiday pay. Any employers who are still using the Percentage Method or an alternative method to calculate holiday pay for permanent part-year workers would do well to revise their methods for calculating holiday pay so as to ensure compliance. If they fail to do, any part-year workers they employ could complain about the size of their holiday pay or bring claims for unlawful deductions from wages. There is some comfort for employers that such claims have a retrospective limit of two years.

Photograph: “Holiday” byNick Youngson used under Creative Commons Attribution 3 licence