The case of Harpur Trust v Brazel [2022] UKSC 21 is a landmark decision by the UK Supreme Court concerning the calculation of holiday pay for part-year workers under the Working Time Regulations 1998 (WTR). This judgement fundamentally affects employers, particularly those employing workers on atypical contracts, such as zero-hours contracts or term-time work. The court ruled that part-year workers are entitled to 5.6 weeks of paid annual leave regardless of the number of hours they work in a year. This decision has wide-ranging implications for employment practices in the UK.
Facts of Harpur Trust v Brazel
Mrs. Brazel was employed as a part-year worker, providing lessons during school terms. She did not work full-time or year-round but was employed continuously throughout the year.
The statutory minimum holiday entitlement under the WTR is 5.6 weeks per year. Mrs. Brazel took her annual leave during the school holidays, in line with her working pattern.
Until 2011, her holiday pay was calculated by averaging her earnings over the preceding 12 weeks in which she worked, as prescribed by the WTR. In 2011, Harpur Trust adopted the 12.07% method, which pro-rated her holiday pay based on the hours she worked during the year. This resulted in lower holiday pay.
Mrs. Brazel contended that the 12.07% method was inconsistent with the WTR and that her holiday pay should instead be calculated based on the statutory formula of averaging her earnings over the reference period.
Legal Issues
The primary issue in Harpur Trust v. Brazel was whether a part-year worker’s paid annual leave entitlement should:
- Be pro-rated based on the number of hours worked (as argued by Harpur Trust), or
- Be calculated based on the duration of employment irrespective of the number of hours worked (as argued by Mrs. Brazel).
Procedural History
- Employment Tribunal: The Tribunal ruled in favor of Harpur Trust, holding that pro-rating holiday pay based on hours worked was a reasonable approach for part-year workers.
- Employment Appeal Tribunal (EAT): The EAT overturned the Employment Tribunal’s decision, siding with Mrs. Brazel. It held that the statutory entitlement under the WTR does not permit pro-rating based on hours worked.
- Court of Appeal: The Court of Appeal upheld the EAT’s decision, rejecting the 12.07% calculation method and affirming that part-year workers are entitled to the full statutory leave entitlement.
- Supreme Court: Harpur Trust appealed to the Supreme Court, which delivered its final judgement in July 2022, dismissing the appeal and affirming the decisions of the lower courts.
Harpur Trust v Brazel Judgement of the Supreme Court
The Supreme Court in Harpur Trust vs Brazel ruled in favour of Mrs. Brazel, delivering the following key findings:
- Holiday Entitlement is Not Pro-Rated: The statutory 5.6 weeks of paid annual leave under the WTR applies to all workers, including part-year workers. The court held that there is no provision in the WTR allowing for pro-rating based on the number of hours or weeks worked in a year.
- Calculation of Holiday Pay: Holiday pay must be calculated by averaging earnings over the preceding 12 weeks (now extended to 52 weeks under subsequent amendments to the WTR). The court rejected the use of the 12.07% method as inconsistent with the statutory framework.
- Proportionate Discrepancy Accepted: The court acknowledged that this approach might result in part-year workers receiving a higher proportion of annual pay as holiday pay compared to full-time workers. However, it found this discrepancy to be permissible under the legislation.
- Legislative Intent: The Supreme Court emphasised that its interpretation aligned with the intent of the WTR to provide workers with adequate rest and leisure, irrespective of their working pattern.
- Practical Implications: Employers must calculate holiday pay based on the statutory formula and cannot reduce entitlement for part-year workers based on hours worked.
Harpur Trust v Brazel Judgement Analysis
The judgement in Harpur Trust v Brazel clarified the application of the WTR in relation to part-year and atypical workers. The following aspects are noteworthy:
- Consistency with EU Law: The WTR implements the EU Working Time Directive, which aims to ensure adequate rest for workers. The Supreme Court’s decision is consistent with this objective.
- Fairness vs. Practicality: The court prioritised statutory fairness over administrative convenience. While the 12.07% method was widely used for its simplicity, it was found to undermine the statutory entitlement.
- Impact on Employers: Many employers must now revise their holiday pay practices, particularly for workers on zero-hours contracts, term-time arrangements, or irregular hours.
- Potential Liabilities: Employers may face claims for backdated holiday pay from part-year workers who were underpaid due to pro-rated calculations.
Impact of the Decision
The Harpur Trust versus Brazel case has significant implications for employment law and practice in the UK:
- For Part-Year Workers: The judgement ensures that part-year workers receive the full statutory holiday entitlement and fair compensation for their leave.
- For Employers: Employers must:
- Cease using the 12.07% method for holiday pay calculations.
- Review and amend contracts and payroll systems to ensure compliance with the WTR.
- Assess potential liabilities for historic underpayments and consider making backdated payments.
- Broader Implications: The ruling may lead to disparities between full-time and part-year workers, creating challenges for workforce management. It highlights the need for legislative clarity to address perceived inequities in the current framework.
Conclusion
The Supreme Court’s decision in Harpur Trust v Brazel is a pivotal development in UK employment law, ensuring fair treatment for part-year workers. While it imposes additional obligations on employers, it reinforces the statutory framework established by the WTR. Employers must adapt their practices to comply with the ruling, prioritising fairness and consistency in holiday pay calculations. This case also highlights the need for clearer legislative guidance to address the challenges posed by atypical working arrangements.