The Employment Appeal Tribunal (EAT) has decided that workers who work irregular hours throughout the year are entitled to holiday pay based on average earnings calculated over a 12 week period, rather than at a rate of 12.07% of annualised hours.
This issue was raised in Brazel v The Harpur Trust where a part-time teacher, working on a zero hours contract during term time, was required to take her 5.6 weeks’ annual leave during the school holidays. The school paid her holiday pay at the rate of 12.07% of her yearly earnings in line with the ACAS guidance. Mrs Brazel argued that receiving 12.07% of earnings is not the same as paying holiday by reference to a week’s pay pursuant to the Employment Rights Act 1996.
The Employment Tribunal (ET) initially dismissed Mrs Brazel’s claim stating that the application of the 12.07% calculation was correct. The ET found that to do otherwise would result in an “unfair windfall” as she would end up receiving circa 17.5% of her annualised hours as holiday pay. On appeal, the EAT reversed the decision maintaining that the overriding principle is that part-time workers are not to be treated less favourably than full-time workers; there is no principle to the opposite effect. It therefore found that the 12 week calculation was the correct method of establishing holiday pay and that the statutory scheme must not be read down to cap payments at 12.07% of annualised hours.
Whilst this finding is logical it does contradict the ACAS guidance of calculating holiday pay for those who work irregular hours. Employers who have implemented this method of calculation are therefore encouraged to review their practices in light of this new finding.