In January, the Government launched a new consultation on how to calculate holiday entitlement for workers who either work only part of the year (for example term time for teachers) or irregular hours.
In this article Chris Dobbs outlines what the Government are proposing in their consultation and provides advice for employers.
Why is the government carrying out the consultation?
The consultation follows the Supreme Court’s decision last year in the case of Harpur Trust v Brazel.
In that case the Supreme Court held that holiday pay under the Working Time Regulations 1998 should not be pro-rated for part-year workers to be in proportion to full-time workers.
What did employers previously do with part-year workers?
It has been common practice for many years, following both previous guidance and case law, for employers to work out holiday pay by using a formula of 12.07% of a worker’s hours.
The Supreme Court in Harpur Trust expressly stated that this is unlawful for part-year workers, as in some cases it means they will get less pay in proportion to full-time workers.
What was the result for part-year workers?
Part-year workers end up receiving more paid holiday entitlement per year than other part-time workers who work the same total number of hours across the year.
The government estimates that the decision affects between 320,000 and 500,000 workers.
Why is the government concerned?
Many of the part-year workers are employed in the public sector, with approximately 37% of them being in education.
As such the Supreme Court’s decision may cost the public purse a considerable amount of money.
The government believes they can save up to £113 million by introducing new legislation.
What is the government proposing?
The government proposes to introduce a reference period to ensure holiday entitlement and hence pay is directly proportionate to the hours worked.
They aim to do this with legislation that applies a reference period of 52 weeks and, most importantly, including weeks in which a worker performs no work at all. Currently any weeks no work is performed are discounted from the calculation for workers doing irregular hours.
When does the government consultation for holiday entitlement end?
The consultation period ends on 9 March 2023 and anyone who wishes to put forward their comments should go to [insert link for the consultation].
A specialist Employment Solicitor’s View
Chris Dobbs said: “We are not surprised that the government is seeking to, in effect, overturn the Supreme Court’s decision in Harper Trust, given that they were the largest employer that was affected.
The Working Time Regulations are woefully out of date, given modern workplace practices, and this is an opportunity to clarify the often-contradictory decisions that have occurred since the legislation came into effect 25 years ago.
However, caution must be taken to ensure there are no unintended negative consequences. We will keep you informed of the outcome of the consultation and any pending legislation.”
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