On Thursday 12th January 2023 the Government started a consultation process to ensure that holiday pay and entitlement received by workers is proportionate to the time they spend working.
In July 2022, the Supreme Court handed down its judgment on Harpur Trust v Brazel. This case concerned the calculation of holiday pay and entitlement of a permanent part-year worker on a zero-hours contract. The judgment held that the correct interpretation of the Working Time Regulations 1998 is that holiday entitlement for part-year workers should not be pro-rated so that it is proportionate to the amount of work that they actually perform each year. Part-year workers are entitled to 5.6 weeks of statutory annual leave calculated using a holiday entitlement reference period to determine their average weekly pay, ignoring any weeks in which they did not work.
As a result of this judgment, part-year workers are now entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year.
Currently, the calculation of a week’s pay is an average over the previous 52 weeks but ignoring any weeks when no work is carried out. The Government proposes that statutory annual leave entitlement for part-year workers and workers with irregular hours should be calculated by employers using following two steps:
- Calculate the total hours a worker has worked in the previous 52 weeks (the reference period), including those weeks without work;
- Multiply the total hours worked by 12.07% to give the worker’s total annual statutory holiday entitlement in hours.
Implications
If the proposal is implemented we are back to the position of holidays being calculated on a pro rata basis.
One very important point to note is that 12.07% is the appropriate percentage where the full time equivalent holiday entitlement is the statutory minimum 5.weeks. The working year is the whole year (52 weeks) minus the annual leave (5.6 weeks) and so 46.4 weeks. 5.6 weeks is 12.07% of 46.4 weeks.
In accordance with NJC terms and conditions in the Green Book, all support staff are entitled to a minimum 32 days (6.4 weeks), rising to 35 days (7 weeks) after 5 years’ service. This entitlement is due to increase by one day on 1st April 2023 to 33 days (6.6 weeks) and 36 days (7.2 weeks), respectively. Holiday entitlement may be more based on local agreements:-
- Wirral – 35 days rising to 41 days after 5 years
- Stoke – 35 days rising to 41 days after 5 years
- Wigan – 32 days rising to 34 days after 2 years and 39 days after 5 years.
- Cheshire – 33 days rising to 38 days after 5 years.
- Lancashire – 33 days rising to 39 days after 5 years
Note there is an additional 1 day to all the above from 1st April 2023.
Therefore, the 12.07% is insufficient in these circumstances.
The formula to calculate the percentage is:-
Number of weeks holiday entitlement
52 weeks minus number of weeks holiday entitlement x 100
Basic Green Book entitlement
6.4 weeks
(52 minus 6.4) x 100 = 14.04%
Different holiday entitlements will result in different percentages. Please contact us and we will calculate them for you.
The consultation closes on 9th March 2023.
Calculating holiday entitlement for part-year and irregular hours workers – GOV.UK (www.gov.uk)
Calculating holiday entitlement for part-year and irregular hours workers: consultation (publishing.service.gov.uk)
