Consultation on Holiday Pay Following Harpur Trust v Brazel

The Department for Business, Energy and Industrial Strategy (BEIS) has concluded its consultation in response to the Harpur Trust v Brazel case, which concerns the calculation of holiday pay for part-year workers. The ruling, which was made last year, affects workers with permanent contracts who work only part of the year, such as those on term-time contracts or zero-hour contracts. The "percentage method" of calculating holiday pay has been deemed unlawful, and employers must now provide a minimum of 5.6 weeks' holiday pay to all part-year workers without prorating.

 Despite Harpur Trust providing a seemingly straightforward calculation (average weekly pay from the previous 52 weeks, excluding weeks not worked, multiplied by 5.6 weeks), its implementation has proved far from simple. This confusion, combined with the unfair disparity in holiday pay between certain workers, prompted the BEIS to launch a consultation considering the issue, with views of employers and employees required by 9 March 2023.

 With that deadline now passed, the BEIS will now consider the responses received, before presumably legislating for any change it considers necessary. As part of the consultation, it confirmed its proposed method of doing so is to include, rather than exclude, weeks not worked in the 52-week reference period, and then multiply those hours worked by 12.07% to calculate the total holiday entitlement.

 The Harpur Trust v Brazel judgment currently remains binding law and a failure to pay holiday pay accordingly may result in claims for unlawful deduction of wages. Employers who have not yet introduced the Harpur Trust method may decide to wait until the findings of the consultation are legislated for, but will remain at risk of tribunal claims in the meantime. In contrast, employers who amended contracts of employment to be ‘Harpur Trust compliant’ may soon find themselves in the difficult position of hoping to renegotiate those contracts.

James' comments were published in  the UK’s leading free-access HR website, Personnel Today.

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