Holiday pay: average over what period?

In a potentially far-reaching judgment the Employment Appeal Tribunal (EAT) has ruled that employers must carry out a complex calculation when working out holiday pay entitlement for part-time workers.

The Working Time Regulations (WTR) dictate that “full-time” (five days per week) workers are entitled to 5.6 weeks’ paid holiday each year, amounting to 28 days. If a worker’s hours are fixed, calculating holidays is straightforward. However, if hours are variable the position is more complex. According to the WTR, the employer should look back at the previous 12 weeks' work – omitting weeks when no work is done – and pay the worker the average weekly pay for the holidays taken.

Many employers in the education sector have taken an annualised approach to holiday pay, paying part-time or term-time workers 12.07% of their annual pay for holidays, on the basis that 5.6 weeks’ holiday entitlement equals 12.07% of a normal working year of 46.4 weeks.

But this broad-brush approach could discriminate against or in favour of workers whose working time does not fit into a regular pattern, as was the case in Brazel v The Harpur Trust [2018] UKEAT 0102_17_0603 (6 March 2018) , which concerned a part-time music teacher. Brazel’s working pattern was irregular, and the EAT held that the school should have taken the strict approach of referring back to the previous 12 weeks' work – omitting weeks when no work was done, and paid Brazel her average weekly pay for the holidays taken.