Government launches consultation on the calculation of holiday entitlement for part-year and irregular hour workers

The Supreme Court's decision in Harpur Trust v Brazel confirmed that part year workers and those working irregular hours are entitled to 5.6 weeks' holiday. The Supreme Court also confirmed that holiday pay for those working variable hours should be calculating by taking their average pay over the last 52 weeks, ignoring weeks where they did not work. This meant the often used 12.07% percentage method to calculate holiday pay for casual workers was no longer correct.

The judgment resulted in some disparity with part-year workers being entitled to a larger holiday entitlement than part-time workers who worked the same total number of hours across the year. The Government has estimated between 320,000 – 500,000 permanent term-time and zero hours contract workers will receive more holiday because of the Harpur case.

The Government is consulting on making changes that allow employers to pro-rate holiday entitlement for part-year workers, so their holiday is proportionate to the time they spent working. This would be achieved by:

• introducing a 52-week holiday reference period which includes weeks where the worker does not work; and
• a return to the 12.07% method by allowing employers to multiply the total hours worked by 12.07%.

If the proposal went ahead, employers would calculate the total hours a worker has worked in the previous 52 weeks (the reference period), including those weeks without work and then multiply the total hours worked by 12.07% to give the worker’s total annual statutory holiday entitlement in hours.

There are useful examples in the consultation paper which can be found here. 

The Government has introduced the consultation to understand how the Harpur judgment impacts different sectors (including agency workers who have complex arrangements). If you are an employer or a worker and want to contribute to the consultation, it is open until 11.45pm on 9 March 2023 and can be found here.