Significant Supreme Court decision clarifies how holiday pay should be calculated

In the case of Harpur Trust v Brazel (see our previous update here for case details), the Supreme Court has confirmed that part-year workers under permanent contracts are entitled to 5.6 weeks leave per year and their leave entitlement should not be pro-rated to that of a full-time worker (as argued by Harpur Trust). The pay for that leave should be calculated using s.224 of the Employment Rights Act 1996, meaning that it should be based on the average weekly remuneration in the period of 52 weeks, ending with the start of the leave period (minus any weeks that have not been worked). For such workers, holiday pay should not be calculated based on 12.07% of their annualised hours. Even though that may result in higher rates of holiday pay for certain part-year workers, the Supreme Court is satisfied that is the correct implementation of the Working Time Regulations 1998.

Employers who apply the 12.07% holiday pay calculation, especially employers who engage workers with atypical working patterns (like offshore workers), may need to review their holiday pay arrangements (if they haven’t done so already). Please get in touch if we can assist.

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