Holiday entitlement and term-time employees
Under the Working Time Regulations 1998 (WTR), all workers are entitled to 5.6 weeks’ holiday each year in the UK. There is no provision for pro-rating entitlement for employees who do not work throughout the full year.
Previously ACAS, the UK’s employment body, recommended that casual workers accrue statutory holiday entitlement at the rate of 12.07% hours worked. This method aimed to ensure that casual workers build up holiday entitlement in the same proportion to hours worked as a standard worker.
However, the recent case of Harpur Trust v Brazel [2022] at the Supreme Court determined that the amount of leave to which a part-year worker under a permanent contract is entitled must not be pro–rated in this way and instead workers should receive 5.6 weeks with reference to a person’s average earnings over 52 weeks.
The reality of this is that set hours, ‘normal’ part-time workers won’t be affected. However, those who are under a permanent contract for the whole year but actually work for less than a full year, such as term time only workers, will be significantly impacted, and can lead to some quite bizarre calculations. For example, an employee retained on a permanent contract who works only one week of the year, earning £2,000 for that work would be entitled to 5.6 weeks’ annual leave. So, they would receive £11,200 holiday pay for a job that paid only £2,000. However, the Supreme Court, said in situations like this it would be unusual for this kind of arrangement to be considered a permanent contract.
Thankfully such bizarre calculations aren’t likely to affect the majority of workers. The legal rules for holiday pay simply require you to maintain normal salary during periods of holiday. It should generally be possible to argue that such workers are already paid in compliance with the rules, as they continue to be paid their normal salary for 5.6 weeks of holiday.
The ruling does however, effect all employees on zero hours contracts as the ruling completely rejects the old 12.07% approach. Even if workers in these situations work fewer than 46.4 working weeks in the year, employers must provide no less than 5.6 weeks of holiday, with the holiday pay calculation being the average weekly pay over the last 52 paid weeks.
If you’re looking to hire in the UK, then UK Employer of Record services have the necessary expertise to keep you compliant with the complexities of UK holiday laws. Check out our UK Employment Guide or fill in a contact us form to find out more information on how we can help.
Sam Barnes
Sales Director
