The allocation of holiday pay for term-time employees remains a significant point of contention for schools and other employers. The issue has played out in the courts in recent years with potentially long-lasting implications for both employees and employers.

With the imminent judgement in the Harpur Trust v Brazel case, which was heard in the Supreme Court in November 2021, those far-reaching implications could see schools being inundated with unlawful deductions claims from staff relating to their holiday pay.

Guidance

The crux of this issue relates to the calculation of holiday pay for some employees. All employees are legally entitled to 5.6 weeks’ paid holiday, known as statutory leave. This represents just over 12 per cent of hours worked over a year, with the work year defined as 46.4 weeks to account for weekends. While the Employment Rights Act 1996 outlines a method of calculating holiday pay for employees, the Advisory, Conciliation and Arbitration Service (Acas) provides additional guidance regarding these calculations for employees working on an irregular basis.

The guidance denotes that “5.6 weeks are excluded from the calculation as the worker would not be at work during those 5.6 weeks in order to accrue annual leave”.

Therefore, it follows that annual leave is accrued based on weeks worked. From the outset, the guidance allows for term-time employees to have their holiday pay subsidised to reflect the weeks actually worked, as opposed to the weeks worked by a full-time employee. However, conflict has arisen regarding this advice, with Lesley Brazel (a part-time music teacher) claiming she is entitled to the 5.6 weeks holiday under her contract. Brazel contends she was underpaid £1,360.72 resulting from the pro-rata system.  

Employment tribunals

In 2017, the local Employment Tribunal (Bury St Edmunds) ruled that there was no unlawful deduction, upholding a system of pro-rating. Subsequently, Brazel appealed to the Employment Appeal Tribunal, by setting out that the Working Time Regulations 1998 had incorporated the fact that part-time workers are employed for fewer weeks than full-time workers. In addition to this, the overarching principle of the Part-Time Workers Regulations 2000 states that a part-time worker shall not be treated less favourably than a full-time worker.

As a result, Brazel’s appeal was upheld, with Judge Barklem highlighting the gravity of the issue and the implications it holds for schools.

Court of appeal and Supreme Court

Upon further appeal by the Harpur Trust, the Court of Appeal corroborated that a part-time employee was entitled to their full statutory holiday pay. With the holiday pay saga having reached the final court of appeal in the UK for civil cases, the UK Supreme Court, a much-anticipated judgment is awaited, with the possibility of very considerable change for term-time employees, especially within the education sector.

Implications

While there is obvious conflict regarding this area, it is hoped that clarity is on the horizon. If the Court of Appeal’s decision is upheld, it will be confirmed that those who work part-time will receive more pay for their holidays than a full-time employee. It is imperative that schools prepare for the likelihood that many employees, similar to Ms Brazel, may be entitled to a higher level of holiday pay. A review should be conducted on how term-time employees’ annual leave is calculated and remunerated.

Claims in Northern Ireland could be particularly detrimental due to the present lack of the two-year backstop on unlawful deductions. This means that part-time employees may be entitled to claim for wrongful holiday pay deductions dating back to 1998 when the Working Time Regulations were implemented, posing a large financial threat to employers. Employers should act to address this situation internally with employees before claims are brought.

Seamus McGranaghan is commercial director at O’Reilly Stewart Solicitors and the only member of the Education and Law Association in Northern Ireland