Good morning and welcome back to your weekly case law update. Last week we had two cases for you, the first concerned trade union negotiated collective agreements and the second looked at contractual illegality and the right to work in the UK.

 

This week we revert back to the mean and only have one case for you (slow news week) and it is on the very dreary subject of calculating holiday pay for casual workers. Whilst irritatingly number-focused for a Friday, it is something many employers might find useful.

 

The question this week is:

 

How should holiday pay be calculated for casual workers who only work part of the year or term-time?

 

Ms Brazel, the Claimant, was a saxophone and clarinet teacher who worked as a visiting music teacher for The Harpur Trust, the Respondent, who ran the Bedford School for Girls. The Claimant worked term-time only (32-35 weeks per year), teaching between 20 to 30 half-hour lessons per week.

 

The Claimant had a permanent contract, however the Respondent had no obligation to offer her work if no pupils required lessons. Essentially, she was a zero-hours worker. Her workload would vary depending on the number of pupils taking musical instrument lessons that term and she was paid monthly based on the number of lessons taught the previous month.

 

As a worker, the Claimant was entitled to 5.6 weeks’ paid annual leave a year. Given the Claimant worked term-time, this was paid in three blocks throughout the year, as is customary in many schools.

 

To calculate holiday pay, the Respondent used the method given in ACAS’s guidance for casual workers. This method gives casual workers 12.07% of their annual hours for holiday pay. This being the amount of leave (5.6 weeks) divided by the amount of weeks worked (46.4 weeks OR 52 – 4.6 weeks). The Respondent divided this figure by three to determine the Claimant’s instalment for that term.

 

The Claimant believed that she was being underpaid for her annual leave. Instead she proposed her leave should be calculated as the average week’s pay for the term (pay for term ÷ 12 weeks) and then multiplying that figure by 5.6 weeks leave. This sum would then be divided into the equal instalments. Using this method the Claimant earned 17.5% holiday pay, almost 5.5% more pay than the Respondent’s method.

 

The Claimant put in a grievance, and, after that was not upheld, initiated ET proceedings. Despite this, she remained employed as a music teacher with the Respondent. The Employment Tribunal dismissed the claim, agreeing with the Respondent that the ACAS method was correct.

 

The Claimant appealed and the Employment Appeal Tribunal allowed the appeal. It agreed with the Claimant’s method for calculating her holiday pay. The Respondent appealed but the Court of Appeal rejected the appeal. The CoA held that there was nothing in the WTR that entitled the Respondent to pro-rata annual leave.

 

The CoA coined a new phrase for casual, term-time staff as part-year staff as part-year workers such as visiting teachers, coaches, invigilators who are retained on permanent contracts for business reasons (less DBS costs etc.) but could be employed freelance. The CoA held that the benefit of employing someone this way should carry the associated holiday costs, even if it does mean, in theory, a music teacher who works one week a year gets 5.6 weeks’ holiday!

 

The takeaway point:

 

Holiday pay for these special part-year workers should not be pro-rated. The correct method for calculating holiday pay for such worker’s is as follows:

 

  1. Calculate a week’s pay using either 12 or 52 week average (total pay for calculation period ÷ number of weeks in calculation period).
  2. Multiply the average week’s pay by 5.6 to get total holiday pay entitlement.
  3. Divide the total figure by the amount of days leave taken (e.g. total holiday pay ÷ 10 days’ holiday).

 

Given the Respondent in this case had based their calculation on ACAS’s guidance, it is likely further guidance will be released for specific categories of part-year workers that this method applies to. We will let you know when any further guidance is released.