Holiday pay calculations for term-time workers
07 August 2019
The Court of Appeal has held that holiday pay for a teacher in permanent employment but working term-time only on irregular hours, should be calculated based on a 12-week average of hours worked.
The Claimant is a music teacher in permanent employment but working term-time only, on irregular hours (around 32) per week. The EAT held that her holiday pay should be calculated based on a 12-week average of hours worked, making, on her hours, holiday pay around 17.5% of annual pay, rather than 12.07% for staff working a whole year (based on 5.6/46.4 weeks).
The Court of Appeal declined to overturn the EAT’s judgment, coining the term ‘part-year worker’ for those employed all year round but not working the whole year. The Court rejected the School’s argument that a pro-rata principle should be applied to the accrual of leave for ‘part-year workers’; EU law did not require leave to be reduced pro-rata, and it wasn’t necessary to apply a pro-rata principle to the accrual of leave under the Working Time Regulations.
The Court noted that not applying the pro-rata principle could lead to anomalous results if ‘part-year workers’ worked a few weeks a year but still had 5.6 weeks leave per year, but if employers take on such staff on permanent contracts (e.g. due to Disclosure and Barring checks), who would not get the benefit of more leave, the advantages of permanent employment may come with additional costs in holiday pay, which wouldn’t apply to freelancers. The Court noted that the circumstances of part-year workers may vary widely (from offshore oil rigs to education), and the approach, in this case, is straightforward and should be followed.
There is never a bad time to review processes and if you are responsible for holiday pay calculations for part-year or term-time workers, then in light of this ruling you could err on the side of caution and see if any employment contracts require revision. What we don’t yet know, however, is whether this case will progress to the Supreme Court - one to watch.