Holiday pay for term time workers

Should holiday entitlement and pay for term time only workers be calculated on a pro-rata basis at 12.07% of annual pay under the Working Time Regulations? 

In Harpur Trust v. Brazel the Court of Appeal said no – workers who are employed all year round but only actually work during term time should not have their holiday pro rated. 

In this case, a visiting music teacher was employed under a permanent zero hours contract. She worked mainly during term time. Her contract provided for her to have the full time equivalent of 5.6 weeks’ annual leave, which had to be taken during school holidays. In an approach that was consistent with the ACAS guidance on holiday pay, the school calculated her holiday pay at 12.07% of hours worked in a term, paid in three instalments at the end of each term. She believed that her holiday should instead be calculated using average weekly earnings over the 12 week period immediately before her holiday was taken. 

The Court of Appeal found that the Working Time Regulations do not provide for the kind of pro-rating adopted by the school, resulting in more generous holiday calculations for the music teacher in question. 

The case is an important one. Those who use the 12.07% approach to pay holiday pay to zero hours staff with permanent contracts should analyse their exposure and consider adapting their approach. Employers should note that the principle only applies to those on permanent contracts, as opposed to seasonal or other casual workers employed on a series of short term / casual contracts.  However, the law may develop in this area – watch this space.

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