Can the holiday pay rate for term-time workers be legally calculated on the basis of 12.07% of annual pay?
No, says the EAT in Brazel v The Harpur Trust, available here.
The EAT held that the correct method is to base the rate on a 12-week average of pay from weeks actually worked (so ignoring the out of term weeks). This is the case even though it means term-time workers will be paid proportionately more holiday pay than a worker working throughout the year.
This is an important decision. Holiday pay for term-time workers is often calculated as a percentage of total statutory holiday entitlement (5.6 weeks) over the remaining number of working weeks in the standard working year (46.4 weeks (which is 52 weeks minus 5.6 weeks)). This results in a holiday payment rate of 12.07%.
The EAT has found this approach to be incorrect. We would recommend therefore that any of our clients who use this method of calculation should instead calculate holiday pay for term-time workers by taking a 12-week average of pay from weeks actually worked prior to the holiday, and ignoring the out-of-term weeks.
We will provide further detail on this case in our March 2018 Newsletter, so watch this space…
Holiday pay for casual or term-time workers continues to be a complex issue. Should you have any concerns about this please do email Menzies Law or call 0117 325 0526.