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6 March 2018 | Comment | Article by Louise Price

Capping zero hours holiday pay


It was not possible for an employer to cap a zero hours, term time employee’s holiday at 12.07% of annual earnings. The correct method for a worker with no settled working pattern is to use a 12 week average calculation instead.

Key facts

The claimant was employed as a music teacher on a zero hours contract. She only worked during term time.

The Respondent Trust (who ran the school) calculated the claimant’s holiday pay at a rate of 12.07% of hours worked in a term, rather than using her average earnings over a 12 week period immediately before holiday was taken. Using the 12 week average approach would have resulted in the claimant receiving a higher percentage of annual earnings (17.5%) as holiday pay because she only worked 32 weeks of the year.

The Trust argued that to use the average earnings calculation would unfairly reward part time workers. The EAT disagreed.

The EAT held that because the claimant worked irregular hours, her holiday pay must be calculated using the 12 week average set out in section 224 of the Employment Rights Act 1996 and not be capped at 12.07% of hours worked.

Digging into the detail

The EAT considered the overriding principle that part-time workers should not be treated less favourably than full-time workers. However, it held that there was no principle to the opposite effect – in other words no principle that full-time workers should not be treated less favourably than part-time workers. Therefore, there was nothing wrong with the claimant receiving proportionately more by way of holiday pay than a full time equivalent employee.

Why is it important?

It is a common method to use the 12.07% calculation to work out what holiday has accrued for a worker with no settled work pattern. This will still be able to be used going forward. What employers will need to be wary about is using the 12.07% calculation as a shortcut when working out the amount of holiday pay due to the worker. The correct approach for workers with irregular working patterns is to use the 12 week average calculation instead.

Brazel v Harpur Trust UKEAT/0102/17

Author bio

A highly specialised lawyer, Louise is a Partner and Head of Employment and HR services. Her expertise includes corporate support work, TUPE, pensions and employee benefits advice. She regularly advises private, public and third sector clients regarding large scale TUPE transfers of staff including drafting indemnities and warranties, advising on potential employment and pension liabilities, information and consultation obligations, and providing best value guidance.
Louise Price

Louise Price

Partner
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