As schools were breaking up for the summer with school leaders already worrying about their budgets for the autumn, the Supreme Court handed down its landmark ruling in the long-running case of Harpur Trust v Brazel. This is a significant decision that will mean that thousands of term-time workers have been underpaid and could now bring claims going back up to two years.
This case involved a school teacher employed on a zero-hours contract of employment to teach music. She was only required to teach during term-time and was not paid when she was not working. Her contract was permanent and rolled over each year. She worked different hours each week and was paid monthly on the basis of an agreed hourly rate.
The ruling
She received 5.6 weeks’ annual holiday which the school made her take in three equal instalments at the end of each term. To start with, it calculated Ms Brazel’s holiday pay in accordance with the rules on a ‘week’s pay’ set out in the employment rights act (ERA). This meant that her pay was averaged and any weeks that she didn’t work ignored.
However, it decided to change its approach. Relying on guidance produced by ACAS (which has since been rewritten), it decided that the fairest way to calculate Ms Brazel’s holiday pay was to pro-rate her holiday to reflect the fact that she worked fewer weeks per year than full-time staff.
To achieve this it capped her holiday pay by applying a mathematical formula of 12.07 per cent – a commonly used figure based on 5.6 weeks’ holiday, divided by 46.4 weeks (52 minus 5.6). At the end of each term, the trust paid her 12.07 per cent of the hours she’d worked at her normal hourly rate as holiday pay. This meant that she received less paid leave than if she’d been paid for 5.6 calendar weeks’ leave at the statutory rate of a week’s pay.
This case doesn’t just affect casual workers
She argued that this was incorrect and resulted in a significant underpayment. The Supreme Court agreed with her. It said that all workers have a fixed right to 5.6 weeks’ holiday and employers can only adjust this when someone’s employment starts or ends part way through a leave year.
The court also said that employers couldn’t use 12.07 per cent (or any other percentage) to calculate holiday pay. Instead, they have to calculate pay by reference to ss221-224 of the ERA. These provisions differentiate between workers who have normal hours and those who don’t.
Implications for schools
Anyone you engage for part of the year on a permanent or continuous contract must receive at least 5.6 weeks’ holiday, even if they only work for a few weeks each year – such as exam invigilators. If you haven’t given them enough holiday, you will need to increase it by changing their contract.
To ease the administrative burden on payroll, I recommend that you set out the dates you want them to take a holiday, eg. at the end of each term. You must calculate holiday pay by averaging their pay over the previous 52 weeks, ignoring any weeks that they haven’t worked each time they go on leave.
This case doesn’t just affect casual workers. Term-time workers who have fixed hours or days of work must also receive 5.6 weeks’ holiday. Each week of holiday is based on their usual number of working days or hours. So, someone who works two days a week during term-time will get 11.2 days’ holiday. If they work five days a week during term-time, they will get 28 days’ holiday.
Lastly, if you give your full-year staff additional contractual holiday, you may have to increase the holiday allowance of term-time staff. You can pro-rate this element to reflect the number of weeks they actually work each year.
School leaders may be concerned about the budget implications of this ruling, especially in given other pay-related budgetary pressures, but they now face the possibility of legal claims if underpayments are not corrected. We recommend that you take legal advice to minimise this risk.
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