Holiday Pay: Not A Welcome Break For Employers
The recent Court of Appeal Judgment in The Harpur Trust v Brazel, though relating to a problem which particularly besets the education sector, offers food for thought (in relation to holiday pay) for seasonal businesses that engage staff on permanent contracts rather than hiring freelance staff on an ‘as and when required’ basis.
Ms Brazel was a music teacher at a school run by a Trust. Her job title was Visiting Music Teacher because she didn’t have a set number of working hours. Her work depended on how many pupils needed lessons in her instruments (clarinet and saxophone), however she usually taught between 20 and 30 lessons per week (each lasting half an hour).
Ms Brazel wasn’t required to work outside of term time, and despite being a peripatetic teacher, she was engaged under a permanent contract, not a freelance/casual contract.
Ms Brazel was clearly a ‘worker’ within the meaning of the Working Time Regulations 1998 (“the Regulations”) which provide that all workers are entitled to 5.6 weeks’ paid annual leave.
Following Acas’ guidance on calculating holiday pay for casual workers, the Trust capped Ms Brazel’s holiday pay at 12.07% of her annual pay by pro-rating her entitlement.
The Trust’s calculation was as follows: 5.6 ÷ 46.4 weeks (being 52 weeks in the year less 5.6 weeks’ holiday entitlement) x 100.
Ms Brazel argued that she was entitled to 5.6 full weeks’ holiday pay. As she worked varying hours, Ms Brazel claimed that the Trust should have taken her average weekly pay for the 12 weeks preceding her holiday and shouldn’t have taken into account the 5.6 weeks when she was on holiday and not working.
The Trust argued that if Ms Brazel’s method of calculation was followed, a hypothetical employee who worked one week per year (for example, an examination invigilator) could potentially receive 5.6 weeks’ pay as holiday pay.
The Court coined the term “part-year worker” because Ms Brazel was on a permanent contract but equally wasn’t part-time as she didn’t work for the Trust for large parts of the year and also didn’t work a full week.
The Court agreed with Ms Brazel and referred to the Regulations which clearly provide that workers are entitled to 5.6 weeks’ paid holiday. It said that the Trust shouldn’t have adopted Acas’ guidelines, adding that they were aimed at casual staff and not those who were engaged on permanent contracts.
The Court did agree that applying the Regulations in this way could produce unfair results. However, it noted that if employers wished to put workers such as Ms Brazel on permanent contracts to gain other benefits (in this case the benefit was easier accommodation of safeguarding and DBS requirements) then they would have to pay the additional costs which came with this.
Food for Thought
Employers engaging workers with irregular hours may view these as casual, freelance relationships.
However a study of the contractual background may reveal that the workers are employed on permanent contracts. Employers would be wise to check whether their freelance or casual contracts are in fact permanent, and should also weigh up the benefits of having permanent contracts in light of the higher cost in holiday pay that permanent contracts might trigger.
In short, employers should review their holiday pay regime in light of this Case to ensure they are properly applying the Regulations.