The Court of Appeal has recently considered the question whether or not 'part-year' (i.e. term-time) workers should receive a pro-rated holiday entitlement in order to reflect the fact that they do not work throughout the whole year.
The claimant is employed by the Trust on a permanent employment contract as a "visiting music teacher". She works variable hours during term time dependent on the number of pupils requiring tuition, and she delivers thirty minute sessions to each pupil per week. She is paid for the hours worked. The Trust had been calculating her holiday pay in line with the approach recommended by ACAS in their guidance for calculating the pay for casual workers (12.07% of the hours worked over the holiday year). However, the claimant argued that she was being underpaid and should have received a higher amount calculated using the normal 12 week calculation set out in the Working Time Regulations 1998 (WTR).
The Trust argued that the principle of pro-rating should apply to part-year workers in respect of the amount of leave accrued, in a similar way as is well established for part time workers and that the claimant should not be entitled to both holiday and holiday pay as if she had worked throughout the year.
The Court held that the existing calculation method under the WTR is straight forward and should be followed where there is a permanent contract in place. It held the existence of a permanent contract is enough to fix a worker’s entitlement to 5.6 weeks’ holiday, to be calculated with reference to the preceding 12 weeks’ pay. That was the case even though it could result in part-year workers receiving disproportionately higher holiday entitlement and pay compared to those working throughout the whole year. The Court concluded that any other finding would essentially involve substituting the existing scheme under the WTR for a completely different one in respect of part-year workers.
The formula in the ACAS guidance will not apply to part-year workers and, instead, if a permanent contract is in place, then regardless of the hours actually worked, workers are entitled to a full 5.6 weeks' pay calculated in the normal way.
The decision has potential implications only for workers on permanent employment contracts, ranging from teachers or lecturers working term time only and those employed with varying hours such as music teachers or sports coaches.
Although the judgment did not mention workers not engaged on permanent contracts, such as workers on zero hours contracts, there is a possibility that, in light of the finding of this case, such workers may attempt to bring claims to obtain the same right to the calculation of their holiday entitlement and pay.
Steps you should take now
We recommend reviewing the way in which your institution engages and pays part year workers (including music teachers and sports coaches) and consider whether you should be calculating holiday entitlement and pay differently in light of this case. Depending on the outcome of your review you may also need to consider implementing a new calculation system and a strategy for dealing with any back pay claims. Please contact a member of our Employment Team for advice on your individual circumstances, to identify the best solution for your institution.
NB: From April 2020 the review period for calculating weekly pay will increase from 12 to 52 weeks
This article is from the October 2019 issue of Education Matters, our monthly newsletter for HR professionals.