A recent decision by the Court of Appeal in the case of Brazel v The Harpur Trust determined that holiday pay for ‘term time’ employees should be calculated using the employee’s average wages over a 12-week period rather than their pro-rated earnings.
Mrs Brazel worked as a visiting music instructor at The Harpur Trust, where she was paid on a zero-hours basis. She argued that the holiday pay calculation employed by the Trust, based on the 12.07 percent calculation, did not comply with working time standards and resulted in a lower amount, and that her holiday pay should be calculated using a 12-week average rather than the 12.07 percent calculation. Approximately 32 hours were worked by Mrs. Brazel on a weekly basis. She contended that her holiday pay should be computed by taking the weekly average of the 12 weeks preceding the date of the calculation and multiplying it by 5.6, as opposed to the current method. By using this method of calculating her holiday compensation, she received roughly 17.5 percent of her yearly salary, which was more than the 12.07 percent of annual salary received by her full-time colleagues.
Consequently, in order to determine holiday pay for a term-time only employee, the employer will now need to calculate the average number of hours worked per working day over the previous 12 working weeks as a result of this decision (disregarding any weeks during which the worker was not paid anything). To calculate out how much a day’s holiday pay should be, the employer should multiply this sum by the employee’s normal hourly earnings.
As a result, a potentially unexpected consequence of the WTR formula is that it may favour term-time employees by providing them with the same holiday compensation as those who work year-round. This is because the 12-week reference period does not include any weeks during which the employee has not been paid, resulting in the worker being entitled to 5.6 weeks’ salary while working less hours per year than they were previously.
When calculating holiday pay, caution should be exercised, and it should be noted that the reference period for calculating holiday pay will change from 12 weeks to 52 weeks starting on April 6, 2020.