The Harpur Trust v Brazel  EWCA Civ 1402
Holiday pay calculation is the hot topic this year with Holiday Pay for Part-Time workers in the spotlight. Most cases have been on what elements of pay should be included in the calculation of holiday pay. This case of Harpur Trust v Brazel, however, focusses on the correct calculation of holiday entitlement and pay for those workers who work for part of the year, e.g. term time only. We are used to referring to those who work fewer than 37 hours per week as part-time, and pro-rating their annual leave entitlement accordingly but this pro-rating still provides for the part-timer to have 5.6 weeks of their working week as leave.
In Brazel, the Court of Appeal has designated a new category of worker – the part-year worker. This group is those employed on a permanent contract for the full year but who do not work the full 46.4 weeks (52 – 5.6). Part-year workers may work full time hours or may work part-time hours. Examples might be oil-rig workers working two weeks on, two weeks off or peripatetic teachers.
So, how does this affect Holiday Pay for Part-Time workers?
Until this case, we have conventionally pro-rated part-year workers’ leave entitlement by calculating the portion of full-year workers time that they work, e.g. 39 / 46.4 = 0.84 FTE if they work full time. Where a part-year worker works part time as well we further pro-rata the entitlement, e.g. 0.84 x 30 /37 = 0.68 FTE. We take those FTE’s and apply them to a full time, full year worker’s annual leave entitlement.
However, following the Court of Appeal’s ruling, things will need to change. The Court distinguishes between annual leave entitlement and entitlement to pay. The Working Time Directive and Regulations set out a clear entitlement to 4 weeks plus an additional 1.6 weeks of annual leave entitlement as a minimum. There is no allowance for pro-rating this entitlement. To do so would mean that an oil-rig worker who works two weeks on, two weeks off (a total of 26 weeks work during the year) would only be entitled to about half the statutory leave entitlement which does not sit well with the established and principle reason for the provisions of annual leave entitlements, i.e. to take a break from the requirement to work.
The legislation then goes on to set out that payment of the annual leave must be at the rate of an average week’s pay – to be calculated over a 12 week reference period where the hours worked varies from week to week [Note: a week in which no work is undertaken must be disregarded for this calculation meaning that the calculation must use 12 weeks in which some work is undertaken.]
So for anyone who is a part-year worker you must now allow for, and pay, 5.6 weeks statutory leave on top of the weeks they are required to work. For example, a term-time only worker must be paid for 39 weeks of work plus 5.6 weeks of statutory leave, giving a total of 44.6 weeks of pay. This can still be spread over 12 months if desirable.
While Brazel is argued with regards to statutory annual leave entitlements, it is worth bearing in mind that the Part Time Workers (Prevention of Less Favourable Treatment) Regulations require that people working less than a full time equivalent are not treated less favourably unless there is objective justification for doing so. It is therefore possible that an argument could be made to apply the Brazel approach to contractual annual leave entitlements too. However, the Green Book expressly permits the pro-rating of holiday entitlement in Part 2, Paragraph 8.1. To as long as the statutory minimum leave entitlement of 5.6 weeks is being met, contractual leave entitlements can still be pro-rated.
Background of the Case
Brazel worked for the Harpur Trust as a clarinet and saxophone teacher. She was employed on a permanent contract which did not stipulate a minimum number of hours to be worked as this was dependent on how many students required lessons in her instruments each term. On top of between 20 and 30 half hour lessons per week, she undertook administrative and ancillary duties during the school terms. She was paid an agreed hourly rate for the work she undertook. The number of weeks she was required to work varied from year to year but fell between 32 weeks and 35 weeks per year.
The Trust based their annual leave calculation on ACAS guidance for calculating the leave entitlement of a casual worker and used 12.7% of time worked in the previous term to make a payment in each of the end of term school closure periods.
Brazel submitted a series of unlawful deduction to wages claims for underpaid annual leave entitlement, all of which were heard together, relying on the Working Time Directive and Regulations. Her claim argued that there is no legal basis for applying a pro-rating approach to the leave entitlement of a person who is employed on a permanent basis, year round.
The Employment Tribunal found in the Trust’s favour and Brazel appealed. The EAT overturned the ET’s finding and remitted the case back to Tribunal to determine the value of the underpayment of leave. Before it could be heard at the first instance court, the Trust appealed the EAT decision to the Court of Appeal. The decision of the Court of Appeal is a useful recap on the provisions of annual leave entitlement and entitlement to pay for leave.