Harpur Trust v Brazel Explained: What it Means for Your Business

Understanding the legislation around holiday pay can be challenging, especially with frequent changes. Calculating holiday pay for employees with irregular working hours adds to the complexity, making payroll compliance a crucial aspect to manage effectively.

Below, we'll delve into what the impact of the Harpur Trust v Brazel case has been - and exactly how to calculate holiday pay for those who don't work full-time.

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Background: a quick overview 

The Working Time Regulations 1998 means all workers get 5.6 weeks holiday pay entitlement pay each year.

But when it comes to people working variable hours or zero-hour contracts and those who don't work all throughout the year (often referred to as "part-year" workers) this becomes more tricky to apply.

Prior to Harper Trust vs Brazel, many employers worked off the idea that 5.6 weeks is equal to 12.07% of a full-time employee's hours (known as the percentage method)

And so to calculate the holiday pay for employees who weren't full-time, they took 12.07% of their annual hours to calculate their entitlement to holiday.

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Summary of the case: here's what happened

The case involved Ms. Brazel, a music teacher employed by the Harpur Trust (which operates a school in the UK).

Mrs Brazel was employed, on a zero-hours contract during term time only - with working hours that varied week-to-week.

The dispute revolved around the calculation of her paid holiday entitlement and whether or not it should be pro-rata’d to take her term-time employment status into account.

Harper Trust calculated her holiday pay at 12.07% of her annual hours...

But Ms. Brazel argued that it should've been calculated based on the Employment Rights Act 1996, using the 12-week reference period.

*Note: the holiday pay reference period was extended from 12 weeks to a 52-week average in 2020.

The issue boiled down to whether workers' rights to paid annual leave is accumulated according to their working pattern or calculated on a pro-rata basis.

The case went through various legal stages, including an Employment Tribunal and the Court of Appeal... and was eventually  heard by the UK Supreme Court. 

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Harpur Trust v Brazel outcome

The outcome was a pretty significant legal ruling, which now dictates how holiday pay should be calculated for certain types of workers - particularly those with irregular hours and part-year employees.

The Supreme Court ruled in favour of Ms. Brazel...

This meant her holiday pay should not be pro-rata’d.

She was entitled to receive her holiday pay based on her average earnings over the previous 52 weeks someone has worked.

The ruling clarifies that holiday pay should not be reduced simply because an employee's work is seasonal or part-time in nature.

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Implications for employers: impact on holiday pay calculations and entitlements

As a result of the case, anyone under a year-round, "permanent" contract gets 5.6 weeks of paid annual leave entitlement - even if there are large parts of the year when they do not work.

The percentage method is now completely unlawful. Instead, calculation of holiday pay for workers with irregular hours should be done using the 52-week period to get their average weekly rate.

This applied regardless of whether or not they work throughout the entire year.

For employers, this means you'll need to be keeping detailed records of the hours employees have worked, even if they don't work on an hourly basis.

The case itself obviously covers employees in the education sector who work on a term-time basis...

But the ruling also affects any businesses that have flexible arrangements (e.g. irregular working hours).

So, although part-time employees are not affected, zero-hours employees who do not work a full year are impacted.

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How to calculate holiday pay for a casual or part-year worker

To get your 52-week reference period, take the past 52 weeks an employee has worked and earned pay.

If there are weeks in which they didn't work or earn, you can simply exclude these from the 52 weeks.

This might mean you need to go further back than 52 weeks, just be sure not to go back any further than 104 weeks.

Then, add up the total pay over these 52 weeks... and then divide this number by 52.

This will give you the rate for 1 week of holiday.

Let's say a worker earns £15,000 over a 52 week period...

£14,000 / 52 = £288

This means a week of holiday would be worth £288.

*If a worker hasn't yet worked for 52 weeks you just take as many paid weeks as you can and work with what you have.

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Harpur Trust v Brazel FAQ

What is the Harpur Trust v Brazel case?

After a zero-hours contract teacher (who only worked during term-time) argued that their holiday shouldn't be calculated on a pro-rata basis, the Supreme Court decided that those who only work for part of the year are entitled to 5.6 weeks of holiday pay.  

Harpur Trust v Brazel implications

For employers, the case means your employees working irregular hours are entitled to receive  holiday pay based on their earnings over the previous 52 weeks they've worked.

Part-year workers' holiday entitlement 

Part-year workers get 5.6 weeks of (paid) statutory holiday entitlement. It’s worth noting that this is the minimum entitlement, you can always offer your employees more.

What about bank holidays?

Whether or not an employee needs to work bank holidays will largely come down to their contract of employment.

How to calculate holiday pay for casual workers

Holiday pay for casual workers (or those who don't work the full year) is calculated based on a 52-week reference period. You just need to add up the sum of their pay over the past 52 weeks they've worked - excluding weeks in which they didn't work - and then divide this by 52. This is what you'd pay for a week of leave.