The practice of paying part-time workers a pro rata equivalent of full-time pay is widely established. However, the Court of Appeal has held in the recent case of Harpur Trust v Brazel that when it comes to holiday pay entitlement, the pro rata principle does not apply for part year workers. This has a significant impact on schools with a high number of term time workers and may require action to be taken.
The challenge arises when term time workers receive rolled up holiday pay. Rolled up holiday pay is, generally, calculated as an additional 12.07% of a worker’s pay for all hours worked - as the required 5.6 weeks’ holiday in the Working Time Regulations 1998 (WTR) amounts to 12.07% of the 46.4 weeks a full time person works in a year. The Court of Appeal’s decision clarifies that this pro rata percentage only applies to part time workers who work the full year. For part year workers, the 46.4 week calculation should not apply. Instead, it needs to be adjusted to reflect actual work completed, which is what the WTR looks at.
It is important to clarify that this adjusted calculation will not apply to all part time workers, only to those that work part of the year and are on rolled up holiday pay. Those working throughout the year retain their pro-rata entitlement to holiday on the principle set out above. It also will not apply to salaried staff paid over twelve months (including most teachers), who generally have the right to take holiday for which the pay is calculated with reference to the previous 12 weeks worked. Rolled up holiday pay is generally only used for individuals who are hourly paid on the basis that they work irregular hours each week meaning the pay for the 12 week calculation period prior to any holiday is likely to change with each holiday, making rolled up holiday pay a simpler option for both parties.
This does mean that part year workers will often be more favourably treated in terms of holiday pay. Rather than taking an average over a year that they do not fully work, their holiday pay is based on the weeks they actually worked multiplied by 5.6. For most independent schools which usually have a 33 week school year, the rolled up holiday pay percentage will be 17%. If the terms worked throughout the year increase or decrease from 33 weeks in total the percentage to be used will need to change.
A point to note is that under WTR, rolled up holiday pay is not permitted as staff should be able to take their holiday entitlement. However, this practice is often adopted with variable workers and the claims that individuals would bring relate to losses for holiday pay (which they have received). Following the Court of Appeal’s decision, schools should consider their working practices in respect of rolled up holiday pay and whether or not the percentages used need to be changed to comply with its judgment. If the percentage does not accurately reflect the number of weeks a part year worker (who is not on an annual salary) is actually working, the school runs the risk of employees raising claims for unpaid holiday.