Changes to holiday entitlement for part-year workers
Holiday entitlement for part-year workers is causing significant confusion among employers.
The issue affects an estimated 500,000 workers from teaching assistants and zero-hours workers to agency workers and seasonal staff in the hospitality and leisure industries.
Many employers use the percentage method to calculate holiday entitlement for part-year workers. This method bases holiday entitlement on the number of hours worked and is accrued at 12.07% of hours worked.
However, the Supreme Court ruling in the recent case of Harpur Trust v Brazel concluded that part-year workers are entitled to the same 5.6 weeks’ annual leave per year that people in full-time employment get, regardless of how much work they have done, rendering the percentage method invalid.
The ruling is controversial as it means that some part-year workers who may only work a few weeks each year would earn more annual leave than part-time working colleagues. It also has implications for employers who must switch to using the Harpur ruling to calculate part-year worker holiday entitlement with the associated cost of awarding additional annual leave to part-year working employees.
To address this, the government carried out a consultation exercise which has just closed. They were seeking views on the introduction of a 52-week holiday entitlement reference period for part-year workers and workers with irregular hours based on the proportion of time spent working over the previous 52-week period. This would bring the holiday pay and entitlement of part-year workers in line with those of part-time workers in ensuring entitlement is directly proportionate to the time spent working.
Responses to the consultation are currently being evaluated and will be used to inform new legislation on the matter.
In the meantime, employers with part-year workers should observe the Harpur ruling and calculate holiday entitlement based on the previous 52 weeks which were worked and ignore the non-working weeks. If in the last year the person has not worked 52 weeks, the employer must go back further until there are 52 weeks to use (unless they simply haven’t worked 52 weeks).
We will keep you posted on the outcome of the consultation and subsequent government proposals.
If you’re an employer who has questions about this or any other employment law issue, please don’t hesitate to get in touch with our Altrincham solicitors on 0161 929 8446, our Stoke-on-Trent solicitors on 01782 205000 or our Birmingham solicitors on 0121 516 3025. Alternatively, you can email firstname.lastname@example.org.