Harpur Trust v Brazel: Supreme Court Clarifies Holiday Pay Calculation for Part-Year Workers

In Harpur Trust v Brazel [2022] UKSC21, the Supreme Court clarified how holiday pay should be calculated for part-time and part-year workers. Here, we will explain the current law on statutory holiday pay entitlement and the Supreme Court’s ruling on the calculation of statutory holiday pay for part-time / part-year workers.

What is statutory holiday pay entitlement?

Staff who work a regular five day week are entitled to a statutory holiday pay equivalent to 28 days (5.6 weeks) of paid annual leave per year. This equates to the worker’s average weekly pay over the preceding 52 weeks before the calculation is made (the ‘Calendar Week Method’). Part-time employees who work part of the year typically have their holiday pay entitlement worked out using the ‘percentage method’. Using the percentage method, holiday pay entitlement is calculated based on 12.07% of every hour worked (this is also called the ‘conformity principle’)

What is the background to Harpur Trust v Brazel (2022)?

In Harpur Trust v Brazel [2022] UKSC21, the Harpur Trust appealed a decision by the Employment Appeal Tribunal (EAT) in favour of a member of staff, Ms Brazel. Ms Brazel is a music teacher who worked for the Harpur Trust part-time during school term and had succeeded in her EAT claim for unlawful deductions from her wages due to the underpayment of holiday pay. The Trust had previously calculated her holiday pay using an average pay method but switched to using the percentage method in accordance with advice from ACAS. As a result, Ms Brazel received less holiday pay.

Ms Brazel had argued that her statutory holiday entitlement should be calculated using her average weekly pay (excluding the weeks that she had not worked). The Harpur Trust made the point that the regular method of calculating holiday pay entitlement (the Calendar Week Method) leads to an “absurd result”; “that absurdity being that a worker in Mrs Brazel’s position (and in the position of some of the other hypothetical workers posited by the Harpur Trust) receives holiday pay which represents a higher proportion of her annual pay than full time or part-time workers who work regular hours”.

The EAT concluded that it was wrong to cap holiday pay using the percentage calculation and that the Calendar Week Method should be used for those in the position of Ms Brazel.

What was the Supreme Court decision in Harpur Trust v Brazel (2022)?

The Supreme Court agreed that the ‘Calendar Week Method’ is the most appropriate method of determining holiday entitlement for part-time/part-year workers on the basis that:

• The ‘conformity principle’ is contrary to the WTR
• The conformity principle requires employers and workers to keep detailed records of every hour they work; hence it is difficult to implement and prone to inaccuracy
• The Calendar Week Method is compliant with the WTD even though it may result in more leave being granted to a part-year worker than to a full-time worker.

The Supreme Court stated, “We recognise, of course, that a construction which leads to an absurd result is, in general, unlikely to be what Parliament intended. However, we do not regard any slight favouring of workers with a highly atypical work pattern as being so absurd as to justify the wholesale revision of the statutory scheme which the Harpur Trust’s alternative methods require”.

Do I need to review my holiday pay entitlement calculations?

The Supreme Court’s decision in Harpur Trust v Brazel may put part-year staff into a more advantageous position relative to their non-part-year colleagues. The ruling will have a significant impact on employers used to using the percentage method of determining holiday pay entitlement for part-time and part-year workers. We expect many employers in the education, hospitality, retail, health, and social care sectors to be particularly affected by this ruling. Employers will now need to review if they need to change their method of holiday pay entitlement calculation and make the necessary amendments to their processes, policies, and systems. They may also need to amend any employment contracts that refer to the use of the percentage method to calculate holiday pay and insert the new calculation. These changes should be made sooner rather than later to ensure conformity with the law and to mitigate the potential for claims for incorrect holiday pay.

How Askews Legal can help

At Askews Legal, our specialist employment law Solicitors can quickly review your existing holiday pay calculations in light of Harpur Trust v Brazel to verify which method you should be using. We can also recommend changes to your internal HR policies and employment contracts, which contain references to holiday pay entitlement and calculation methods. If you are subject to claims in relation to incorrectly calculated holiday pay or historic losses, we can also advise, represent, and protect your interests.

To talk to us about holiday pay entitlement calculations, please call us on 02476 231000 or email enquiries@askewslegal.co