The government has launched a consultation on holiday entitlement and pay to address issues arising out of the Supreme Court’s judgement in Harper Trust v Brazel.
What did the Supreme Court Decide?
In July 2022, the landmark Supreme Court’s decision in Harpur Trust v Brazel provided that holiday entitlement for part-year workers should be a minimum of 5.6 weeks of paid annual leave. This means that any worker with a continuing contract throughout the year, but who only works for certain periods such as term time, must not have their holiday pay pro-rated by the proportion of the year that they have worked. The details of that case can be found in our previous article here.
The Reasoning Behind the Consultation
The Supreme Court’s judgement caused much confusion for employers. Of particular concern for many was the fact that as a result of the decision, part-year workers were entitled to more annual leave than part-time workers who work the same hours over the course of the year.
To address this disparity, the government launched a consultation, which opened on 12 January. It essentially aims to reverse the Harpur Trust judgement and simplify the holiday pay and entitlement rules.
What is the Government Proposing?
The consultation paper is proposing that holiday entitlement for part-year and irregular-hours workers should be calculated based on the hours worked in a 52-week holiday entitlement reference period. Under this method, there would be no need to skip weeks not worked, effectively allowing employers to pro-rata holiday entitlement for part-year workers so that they receive leave in proportion to the total annual hours that they worked.
Under the proposals, holiday pay entitlement will be determined by calculating the total hours that a worker has worked in the previous 52 weeks (including those weeks where no work is performed) and multiplying that by 12.07% to give the worker’s total statutory annual leave entitlement in hours. This method will be familiar to employers as it was previously widely used and was the approach recommended by ACAS.
Should I Make Changes to Holiday Pay Now?
If successful, the consultation could result in new legislation that would reverse the effects of the Supreme Court’s decision in Harpur Trust and make it easier for organisations to understand the amount of holiday entitlement due. As things stand, however, the Supreme Court’s decision remains binding law unless and until the government introduces legislation to change how holiday entitlement is calculated, so for now employers should continue with the method resulting from the Supreme Court’s judgement.
The consultation will close on 9 March 2023.
We will keep you updated on the results of the consultation but if you require any further information about holiday pay, contact our experienced employment lawyers today or email us.
