The Supreme Court’s recent judgment in the case of The Harpur Trust v Brazel will have substantial implications for many sectors who regularly engage permanent part-year or casual workers.
Background
Mrs Brazel worked as a music teacher for a school run by the Harper Trust. She was employed under a permanent, zero hours contract and worked mainly during school term-time. Under Mrs Brazel’s contract, Mrs Brazel was entitled to 5.6 weeks’ paid annual leave, which she was required to take in three blocks during the school holidays. As is common for school staff, Mrs Brazel was paid holiday pay equating to 12.07% of the hours she had worked that term.
Mrs Brazel subsequently brought a claim to the Employment Tribunal alleging that her holiday pay should be paid at the level of her average earnings over the 12-week period immediately before the holiday was taken. This would have resulted in Mrs Brazel, receiving a higher percentage of annual earnings as holiday pay (roughly 17.5% of term time pay as holiday pay) than full time workers. The Employment Tribunal dismissed the claim holding that a principle of pro rating should apply to the effect that where a worker has no normal hours and has worked less than a full time worker, holiday pay should be capped at 12.07% of annualised hours.
Mrs Brazel appealed to the Employment Appeal Tribunal who upheld the appeal, finding that there is no requirement in the legislation to pro rate holiday pay for part-year workers to ensure that they do not receive favourable treatment in comparison to full-time workers. The Court of Appeal subsequently dismissed the appeal from the Harpur Trust and agreed with the reasoning of the Employment Appeal Tribunal.
The Supreme Court decision
The Harpur Trust appealed to the Supreme Court asserting that:
- Annual leave should reflect the amount of work that Mrs Brazel actually performed during the annual leave year;
- There were alternative methods which were more logical in calculating annual leave and pay than those currently set out in the legislation; and
- The decision in the Court of Appeal led to an “absurd” result that a part year worker received a higher proportion of holiday pay than full time workers.
The Supreme Court unanimously rejected the appeal. The Court held that regardless of the proportion of each year which the worker has worked, they have a statutory entitlement to 5.6 weeks annual leave each year and this statutory entitlement is not reduced on a pro-rata basis if they only work part of the year. Moreover, Harper Trust’s alternative methods of calculating annual leave and pay were not in accordance with the statutory scheme and whilst the Court acknowledged there might be some instances where a part-year employee receives favourable treatment in comparison to full-time workers, it was not so absurd to require a revision of the statutory scheme. Therefore, the correct method of calculation of weekly pay for a ‘part-year worker’ is an average of the most recent 12 weeks’ of earnings, ignoring any weeks where earnings were zero (such as school holidays).
James Pitts comments:
"This case may well be the final nail in the coffin for the use of the 12.07% multiplier. Whilst it is important to highlight that the case involved part-year employees on permanent contracts which tend to be restricted to certain sectors such as in schools or agriculture, it must also be noted that this case could potentially pave the way for casual workers not employed on permanent contracts to attempt to argue that their holiday pay should not be subject to the 12.07% cap. Businesses should review the contracts of their part-year or casual workers and consider whether steps are required to be taken to ensure that these workers are appropriately compensated for the statutory holiday entitlement."
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