How should an employer deal with holiday pay for zero hours workers? Is it acceptable for the employer to simply carry out a mathematical calculation as to pro-rata holiday entitlement based upon the number of hours worked? These were the questions that the Employment Appeal Tribunal had to deal with in the case of Brazel v The Harpur Trust.
Frequently an employer who has workers on zero hours contracts will simply calculate holiday entitlement as a percentage of the hours that the worker actually performs. The calculation used (and which ACAS had referred to in their guidelines) is designed to reflect the statutory entitlement to 5.6 weeks of holiday a year. The calculation is :
- There is 46.4 weeks of the year in which work can be performed (52 weeks less the statutory holiday of 5.6 weeks).
- Holiday therefore accrues at the rate of 12.07% of the hours worked (5.6 weeks of holiday divided by the 46.4 weeks of work).
In the Brazel case, Mrs Brazel was a part time music teacher on a zero hours contract at Bedford Girls School (run by the Harpur Trust). The school calculated her holiday entitlement at 12.07% of the hours she worked. This gave her holiday entitlement equivalent to a full time equivalent employee at the school.
Mrs Brazel brought Employment Tribunal proceedings alleging that the calculation method used by the school amounted to an unlawful deduction from wages. She contended that the School had fallen into error in calculating her holiday in this way. She referred to the statutory mechanism for calculating holiday set out at s.224 of the Employment Rights Act 1996. This mechanism says that holiday should be calculated by carrying out an average of the earnings in the 12 week period immediately before holiday is taken. The Employment Tribunal decided that there was no unlawful deduction from wages.
The Employment Appeal Tribunal disagreed. The Judge accepted that the calculation method at s.224 of the Employment Rights Act could lead to anomalies – particularly for term time only workers. The Judge gave the following example of this in his judgment : a part-time worker may accrue holiday at a rate of 17.5% (depending when holidays fall and ignoring non working weeks) compared to an equivalent full timer who would accrue holiday at a rate of 12.07%.
The Employment Appeal Tribunal rejected the argument advanced on behalf of the school that this ‘windfall’ should not be allowed as it is unfair to full time workers. The Judge observed that the laws relating to part-time workers are designed to ensure that part-time workers are treated no less favourably than full time workers – but no equivalent principle applies for full time workers.
This decision leaves a dilemma for employers with zero hours contract workers. To carry out a 12 week average calculation is bureaucratic and timeconsuming, yet to do otherwise is potentially unlawful…