Holiday pay

The entitlement to paid holiday is an important and valuable right to those in employment. The Supreme Court has recently given a judgment which could affect many in part time work. The judgment described the issue as follows:

'This appeal raises an important issue about the statutory leave requirement for part-time workers who may also be described as part-year workers, namely workers who work for varying hours during only certain weeks of the year but have a continuing contract throughout that year. These workers neither work the full number of hours worked by full time workers nor the full number of weeks worked by parttime workers. Their work is irregular. The issue is whether their leave entitlement is calculated on the same principle, proportionally, as full-time employees (which would mean that the weeks that they do not work reduce their entitlement) or whether their leave must be calculated ignoring those weeks. The latter would leave them with an entitlement which proportionally exceeds that of other employees.'

The case involved a visiting music teacher working at a school run by an educational trust. The trust accepted that the teacher was a 'worker' and further that she was entitled to 5.6 'weeks' of paid annual leave during the year. It was agreed that she would take her annual leave during the school holidays when she was not required to give lessons. The way that the teacher's holiday pay was changed by the trust after some years working for the trust. This resulted in her receiving less pay because the trust argued that her holiday pay should be calculated on a pro rata basis as it reflected her accrued leave in proportion to the hours actually worked.

The Supreme Court upheld the Court of Appeals' view that as a 'part year' worker it was not possible under UK law for her holiday pay to be calculated on a pro rata basis. This means that holiday pay is calculated over the average earnings of the preceding 52 weeks and any week in which the worker did not work or draw earnings are ignored.

The judgement is significant for people who are employees or 'workers' (but not independent contractors) and to the organisations employing them. Both should check the situation – an employee or worker should check whether they have been underpaid for holiday pay. Employers should carefully check the position of those who are on permanent contracts but who only work for part of the year. Employers could face increased salary bills.

This is a complex area for employers and those they employ - taking specialist legal advice will help to cut through the technicalities.

To discuss this or any other employment matter, contact us.

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