Holiday pay calculation for permanent zero-hour contract workers

The law on how to calculate holiday pay continues to develop especially with different types of working arrangements becoming increasingly popular. In Harpur Trust v Brazel, the Court of Appeal has confirmed that workers on a permanent zero-hour contract should receive 5.6 weeks’ holiday pay using the average rate of pay over the previous 12-week period rather than pro-rata.

The Background

Ms Brazel was employed under a zero-hour contract as a music teacher during term times and entitled to 5.6 weeks holiday. The Trust calculated her holiday pay on a pro rata basis of 12.07% in accordance with the ACAS booklet on “holidays and holiday pay”. Ms Brazel argued that this calculation treated part-year workers less favourably than full-time workers. Ms Brazel argued that pay should be calculated based on an average of 12 weeks’ pay which would equate to around 17.5%.

The Court of appeal agreed that the correct method of calculating holiday pay for part-year workers was based on an average of 12 weeks’ pay (this will change to a reference period of 52 weeks from April 2020).

What to take from this case?

This case highlights the care that employers need to take when working out holiday pay not just for part- year workers but how holiday pay is applied to all. ACAS will no doubt be updating their guidance on permanent part-year workers in due course.

If an employee’s pay has not been calculated in accordance with the above, then they may pursue a claim for unlawful deductions from wages going back 2 years.