Case Update: Harpur Trust v Brazel
The Supreme Court has now issued its long-awaited judgment in the case of Harpur Trust v Brazel, upholding the decision of the Court of Appeal.
The Supreme Court has now issued its long-awaited judgment in the case of Harpur Trust v Brazel, upholding the decision of the Court of Appeal. This decision will have significant financial ramifications for a number of employers and employees alike, with many employers awaiting the final judgment before making any adjustments to their holiday pay calculations.
Who will be affected by this decision?
This case relates to how holiday leave and pay should be calculated for those workers who are employed throughout the whole year but who only work for part of it (‘part-year workers’).
Why was there an issue?
Without some degree of pro-rating of leave for part-year workers, this results in them being treated more favourably than full-year workers – both would be entitled to 5.6 weeks’ statutory leave, despite one working for fewer weeks than the other. This could cause understandable tensions within a workplace with both full-year and part-year staff.
The Trust was seeking to use a percentage method (12.07%) for calculating holiday pay to ensure parity between full- and part-year staff. This method was the approach previously recommended by Acas for calculating the pay for casual workers, although this guidance has since been rewritten. The Supreme Court however, (agreeing with the Court of Appeal), held that there was nothing preventing this more favourable treatment and that the percentage method should not be used.
How should holiday pay be calculated?
Part-year workers who are employed throughout the holiday year are entitled to 5.6 weeks statutory leave, irrespective of the fact that they do not work for part of the year. A ‘week’s pay’ for each week of this leave needs to be calculated in accordance with the provisions of the Employment Rights Act 1996 – and so, for part-year workers with no ‘normal hours’ of work, a 52-week average will need to be calculated. However, and this is where the potential unfairness comes in, weeks in which no remuneration is payable must be disregarded, and earlier weeks brought in to bring the average up to 52-weeks.
So are all issues now resolved?
Well, not quite. It is clear what amount of leave in weeks part-year workers are entitled to, and it is clear what methodology should be used to calculate pay. But what is actually a week’s leave (as opposed to a week’s pay for a week’s leave)?
Take the situation (however unrealistic) of a worker who wants to break their holiday down single days throughout the year:
- If they are a full-year worker working 5 days a week, they are entitled to 5.6 weeks leave, amounting to leave on 28 different occasions throughout the year.
- If they are a full-year worker working 3 days a week, they are again entitled to 5.6 weeks but in this case, this amounts to them taking leave on 17 (rounded up) different occasions throughout the year.
- If they are a part-year worker on variable hours/days, they are also entitled to 5.6 weeks leave. But on how many occasions can the worker request leave?
This isn’t addressed by the judgment, because it didn’t need to be; in this case, Ms Brazel was always treated as taking her leave in three separate tranches, amounting to 1.87 weeks’ at a time and so the Supreme Court was not required to consider this point.
Managing leave
Given the difficulties identified above and the administration involved with carrying out 52-remunerated-weeks averaging exercises each time leave is taken, employers may wish to consider reviewing when holiday can be taken. Under the Working Time Regulations, employers can serve notice requiring leave to be taken at a particular time provided that this right has not been varied by a relevant agreement and that the appropriate notice is given.
Alternatively, employers who do not wish (or need) to be prescriptive about when leave is taken may still consider obliging employees to take leave in blocks of time to limit the number of averaging calculations that are required, and/or to require leave requests to refer to a week or proportion of a week.
Given that holiday terms are required to be included in contracts of employment, we’d suggest advice is sought before making any amendments which would result in contractual changes (including changes to terms within collective agreements). In addition, care would need to be taken if changes are only to be applied to part-year workers to avoid any potential discrimination claims.
Managing employee relations
As set out above, there may well be some full-year workers who feel that the outcome of this decision is unfair. For example, in Brazel, the example was given of an exam invigilator, who works only three weeks a year but who works 40 hours in each of those three weeks. Using the averaging method to calculate holiday pay would result in this individual receiving holiday pay almost twice the amount of their annual earnings.
Employers who do engage workers who work for only part of a holiday year may wish to give greater consideration as to how those arrangements will work moving forwards.
Assessing the impact
Employers will need to review the arrangements that they have in place for calculating holiday leave and pay entitlements for part-year staff to ensure that they are consistent with the approach taken in Brazel. Part of this process may well involve legal audits to review whether practices are consistent and, if not, what the potential risks and/or costs associated with the same are.
If you would like to discuss the impact of the Brazel decision on your organisation and your current annual leave and holiday pay arrangements for part-year workers, please contact Ian Deakin.
Related expertise
You may be interested in...
Opinion
Mopping up after a leak – how businesses can take steps to protect their confidential information
Online Event
Wellbeing and financial considerations – practical solutions for challenging times
Press Release
Browne Jacobson collaborates with The GLAA and University of Nottingham to tackle modern slavery and human trafficking
In Person Event
Navigating your way through high profile sensitive reviews and investigations
Legal Update
Teacher strikes – lessons learnt so far
Opinion
Can toilet facilities amount to sex discrimination?
Opinion
Consultation launched on minimum ambulance service levels during strike action
Opinion - Maternity services
Changes to redundancy protections for employees post-maternity leave
Opinion
BMA issues medical locum rate card for junior doctors
Legal Update
Employee who refused to wear a face mask fairly dismissed
Opinion
New toolkit to support safer recruitment in the care sector
On-Demand
Employment update webinar
Opinion
Term-time school worker entitled to national minimum wage for unworked basic hours
Opinion
Fire and re-hire – draft statutory code
Opinion
Menopause and the workplace
Opinion
Consultation on holiday entitlement – part-year and irregular workers
Opinion
Government introduces new “anti-striking laws” to be discussed in Parliament
Opinion
Twitter facing employment claims following mass redundancies
News that Twitter is being threatened with multiple claims by UK employees following mass redundancies provides a reminder of the risks that comes with an employer implementing large scale redundancy exercises.Legal Update
Industrial Action and Minimum Service Levels
Legal Update
Discrimination comes of age
Legal Update - Shared Insights
Shared Insights: Looking ahead to 2023 – what Health and Care employers need to know
Opinion
Rising Employment Tribunal backlog
Legal Update
Official statistics demonstrate a new wave of age discrimination claims
Opinion
Menopause and the NHS workforce addressing the female brain drain…
Opinion
4-day working week a success?
The Covid-19 pandemic drastically changed the world’s way of working, with increased flexibility being greatly desired by employees. Earlier on in the year, a number of organisations trialled the concept of a 4-day working week – which has clearly been a success for many.Legal Update
Coming of age
Official statistics show that 15,336 claims which included a complaint of age discrimination were received at the Employment Tribunals between March 2020 and March 2021.
Published Article
Starling Bank employment tribunal
The outcome of the Employment Tribunal claim brought by Gulnaz Raja against Starling Bank Limited (1) (Starling), and Matthew Newman (2) was reported last month.
Published Article
EU banks show slow progress on gender diversity
Opinion
Rising wages ahead
In the Autumn Statement delivered on 17 November, rises to the National Living Wage and National Minimum Wage rates were announced, to take effect from 1 April 2023.
Opinion
World Cup 2022 – how employers can avoid scoring an own goal!
The World Cup kicks off in Qatar on Sunday 20 November 2022, with the final taking place on Sunday 18 December 2022. Undoubtedly, this is a huge sporting event, and many employees will be keen to show their support for their favourite teams. However, due to the time difference, start times for the matches are between 10 a.m. and 7 p.m. UK time, which could have an impact on employers if employees who wish to watch the matches are scheduled to work.
Legal Update
Settlement agreements – what are the limitations?
Settlement agreements are commonplace in an employment context and are ordinarily used to provide the parties to the agreement with certainty following the conclusion of an employment relationship.
Opinion
The vanishing dismissal
Where an employee appeals against their dismissal under a contractual appeal procedure and their appeal is successful, reinstatement to their previous role is automatic and does not require approval or agreement from the employee.
Opinion
Settlement agreements – what are the limitations post Bathgate?
Settlement agreements in an employment context are ordinarily used to provide both parties with certainty following the conclusion of an employment relationship – but what happens when there is alleged discrimination after entering into a settlement agreement?
Legal Update
IR35 rules here to stay after government U-turn
A few weeks ago we brought you news that following the Government’s mini-budget it was confirmed that the off-payroll working rules (known as “IR35”) put in place for public and private sector businesses from 2017 and 2021 would be scrapped from April 2023.
Legal Update
Redundancy consultation and selection concerning expiry of a fixed term contract – EAT put the spotlight onto a ‘selection pool of one’
In Mogane v Bradford Teaching Hospitals NHS Foundation Trust the Employment Appeal Tribunal (EAT) considered whether it was fair to dismiss a nurse as redundant on the basis that that her fixed-term contract was due to expire before that of her colleague.
Opinion
Lying on your CV – what can possibly go wrong?
The majority of people do not feel the need to embellish their CV to get that coveted position and move on up the career ladder. Their worthiness and benefit to the hiring organisation are easily demonstrated through the recruitment process – application, psychometric testing, selection day or interview.
Legal Update
Changes to holiday pay for part-year workers
In July 2022, the Supreme Court handed down its long-awaited Judgement in the case of Harpur Trust v Brazel relating to the correct calculation of statutory holiday pay for part year workers. This decision has implications for all part year workers on contracts which subsist all year round, whether their hours are normal or irregular.
Opinion
“Red tape” reform and no-fault dismissals
The Government has announced a change to the categorisation of “small” businesses to reduce the amount of regulatory compliance (or “red tape”) required. Currently, SMEs (those with fewer than 250 employees) are exempt from certain regulations – such as the obligation to comply with gender pay reporting. With effect from 3 October, these exemptions will be widened to apply to businesses with fewer than 500 employees.
Opinion
Internal reports and privilege
In University of Dundee v Chakraborty, the Employment Appeal Tribunal (EAT) considered whether a first draft of a grievance report could retrospectively be deemed to be privileged.
Opinion
IR35 rules to be scrapped from April 2023
The Chancellor’s recent mini-budget provided a significant announcement for business as it was confirmed that the off-payroll working rules (known as “IR35”) put in place for public and private sector businesses from 2017 and 2021 will be scrapped from April 2023.