Initially, the Employment Tribunal hearing the case agreed with the respondent, finding that, “the Tribunal needs to determine what the claimant’s basic hours are and it is clear that she is not working during the 12 weeks’ leave.” As such, the Tribunal decided that the claimant’s basic hours were 21 hours per week over 40 weeks.
The claimant appealed to the EAT, who found that the Employment Tribunal had conflated ‘basic hours’ with ‘basic working hours’.
Regulation 21(3) The National Minimum Wage Regulations 2015 stipulates that a Tribunal should identify the hours for which the claimant is entitled under their contract to be paid their salary. Although the respondent accepted that ‘basic hours’ could include ‘non-working hours’, they contended that this only included, “days when the worker would otherwise be working”.
The EAT disagreed, stating that the regulation, “simply looks to whether there is entitlement to be paid in respect of a number of hours in a year ascertainable from the contract. It does not focus on the quality of those hours…”
The EAT pointed out that regulation 27 expressly refers to time “when the worker would otherwise be working” in the context of travel and training. Regulation 21(3) could have used the same wording had it intended to exclude hours that the employee would not otherwise be working from the assessment of basic salaried hours under the contract of employment.
As the claimant’s contract of employment stated that she would be, “entitled to the usual school holidays as holidays with pay”, the EAT decided that the Employment Tribunal had incorrectly determined the claimant’s basic hours and remitted the case to a differently constituted Employment Tribunal.
This case highlights that in assessing an employee’s basic salaried hours for the purposes of calculating the NMW, Tribunals are required to place significant weight on the wording of the contract of employment. If a school, having engaged a term-time only employee, intends to exclude school holidays from the NMW calculation, they will need to ensure that the wording of the contract of employment does not include normal pay during the school holidays.
With the NMW rates set to increase on 01 April 2023, our team of solicitors can support schools in assessing what should be included in calculations for the NMW and how the contract of employment should be drafted to achieve the desired result.
Please note that this information is for general guidance only and should not substitute professional legal advice. If you have specific concerns, we recommend consulting one of our legal experts.