Important Legal Update

Hi all

I wanted to let you know of an important legal update about holiday pay.

Over the last few months, I have attended several webinars with prominent barristers and, in particular, with the barristers who represented Mrs Brazel in the case of Brazel v Harpur Trust [2022] UKSC 21, a recent supreme court decision about holiday pay.

The case decided that all workers are entitled to 5.6 weeks holiday per year. Yes, that is already the legal position but the issue is where the worker does not work the full 46.4 weeks of the year (i.e. 52 weeks less 5.6 weeks holiday). For example, those that work term time only or do seasonal work. It also applies to those who do not work a fixed number of hours each week.

Previously, the ACAS guidance has been that we take the 5.6 weeks / 46.4 weeks x 100 and this gives us the magic 12.07% on which some of you base your holiday calculations for atypical workers. However, this has been found to be contrary to the law. In the example of a person who works in a school for, say, 35 weeks per year, if they receive 12.07% of 35 weeks, they are only actually receiving 4.2 weeks holiday pay and not the 5.6 weeks they are entitled to under the legislation. The case of Brazel v Harpur Trust has determined that this is not right. This probably makes sense in the scenario of a term time only worker but what about a seasonal worker who works for 3 months of the year and then becomes entitled to 5.6 weeks paid holiday? This amounts to 43% of their working time being paid as holiday!

A big factor is to consider whether the worker is a permanent worker or whether they are engaged temporarily and the thinking is that the employer has the benefits that come with permanent workers, e.g. not having to re-train, conduct DBS checks, recruitment costs so will have to deal with the downside, which is that they are entitled to the full 5.6 weeks paid holiday per annum.

It is a tricky area and going to be subject to further challenges. If you consider your business will be affected by this decision, please get in touch and we will assist you to make sure that your contracts are structured in such a way as to make the holiday pay fair for your employees and for your business.

While the above is now the current position, the government has announced that it is consulting about changes to the law to deal with the effect of this case. Please feel free to contribute to the consultation (click here). Otherwise, we will keep you posted if and when we hear about any changes.

Kind regards

Emily