Many businesses rely upon ‘part-year workers’ or casual workers in order to meet seasonal or market demands. The recent additional pressure placed on the care sector as a result of both the pandemic and the concurring staffing issues, may have resulted in a number of care sector operators relying on casual workers to cover any staff shortages they may face.
However, the Supreme Court’s recent judgment in the case of The Harpur Trust v Brazel may have substantial implications for care sector businesses who regularly engage these types of workers.
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 is the statutory minimum entitlement under the working time regulations). She was required to take this leave 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. This percentage is based on the standard working year being 46.4 weeks (i.e. 52 weeks less the statutory minimum of 5.6 weeks holiday entitlement) – 5.6 weeks is 12.07% of 46.4 weeks!
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 working time regulations 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 working time regulations; and
- The decision in the Court of Appeal led to an “absurd” result that a part year worker received a significantly 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 an entitlement to a minimum of 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).
What could this mean for the care sector?
This decision may result in the end of the use of the 12.07% multiplier. Whilst this case only involved part-year employees on permanent contracts, it 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. This could potentially have a significant impact on those care sector businesses who are engaging casual workers. It is therefore important that they review their contracts for these workers in order to consider whether steps are required to be taken to ensure that the workers are appropriately compensated for the statutory holiday entitlement.
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