The Court of Appeal has made its judgment on the correct calculation of holiday pay in the case of a permanent employee, whose working pattern varied across the course of the year. This decision is potentially very far reaching and will impact all businesses who employ permanent staff who only work for part of the year.
The individual, Ms Brazel, was a music teacher whose teaching duties were conducted during term time only. She was a permanent employee, rather than a freelancer, although she carried out her work only during term time and that distinction was relevant to the Courts conclusion on holiday pay. This will be a particular issue for the education sector where employees may only work during term time, but it will also affect any workers with irregular working hours.
Historically holiday pay for such workers has been typically been calculated on the basis of 12.07% as recommended by ACAS in their guide 'Holidays and Holiday Pay'. The judgement in this case however that there is no basis to pro-rate in this way where someone works for part of the year rather than part of the week and instead under the Working Time Regulations the previous 12 weeks average pay should be used to calculate holiday pay.
It is important that schools and colleges and any other businesses with workers with irregular hours now assess which engagements may be affected and quantify the impact of any arrears claims.
If you need any further advice with regard to this decision and its impact on your organisation please do get in touch.