How should I calculate holiday pay for term-time workers?

The case

As a part-time music teacher employed by The Harpur Trust, Ms Brazel had a permanent contract of employment, however, she was not guaranteed a minimum number of hours per week, nor was she expected to work during the school holidays. In practice, she worked for approximately 32 weeks per year, and the Court of Appeal referred to her as a ‘part-year worker’.

As per the Acas guidance on holiday pay for casual workers, The Harpur Trust paid Ms Brazel 12.07% of her annual earnings as holiday pay, paying her a third of this at the end of each of the three school terms.

Ms Brazel argued that this method of calculation resulted in her receiving a lower figure for her holiday pay than is required by the Working Time Regulations 1998.

The law

All workers are entitled to be paid for a minimum of 5.6 weeks of annual leave per year, which can cause difficulties when trying to calculate the weekly pay for employees whose working hours vary from week-to-week.

If a worker’s ‘normal’ hours cannot be determined, their holiday pay should be calculated by taking an average of their earnings over the 12 weeks before their holiday. However, the Employment Rights Act 1996 states that this period should not include any weeks in which no payments were made to the worker. Therefore, when working out holiday pay for term-time workers, any school holidays that fall within that 12 week time period should not be included.

The outcome

The Court of Appeal agreed with the Employment Appeal Tribunal’s decision that The Harper Trust was wrong to calculate her holiday pay based on the Acas calculation of 12.07% of her annual earnings.

In this instance, even though Ms Brazel received disproportionately more holiday pay compared to a full-time worker, she was correct in insisting that she should be paid based on her average wage over the 12 weeks prior to the holiday being taken.

What does this case mean for your organisation?

Employing term-time workers can complicate holiday pay calculations, particularly in the education sector that regularly employs casual workers such as music teachers and examination invigilators.

While methods for calculating holiday pay entitlement vary from employer to employer, each situation must be individually reviewed and carefully considered.

The outcome of this case may see an increase in the number of workers and unions questioning holiday pay calculations. It is, therefore, important to regularly review processes and policies to ensure that legislation is fully complied with and, where necessary, to make prompt adjustments to avoid tribunal claims.