Following news earlier this year on the Government’s proposal to reform holiday entitlement and pay, several hospitality business owners and managers are increasingly concerned about legislation surrounding part-year workers and their pay and holiday entitlement.
Paul Kelly, Partner and Head of Employment at Blacks Solicitors shares his insight into what hospitality businesses need to be aware
of when it comes to managing holiday and part-year workers,
how to calculate pay accurately and the legislation in place to ensure that holiday entitlement is calculated correctly.
Almost all people classed as workers, including those in the hospitality industry, are legally entitled to 5.6 weeks’ paid holiday a year (known as statutory leave entitlement or annual leave1). This includes:
- Agency workers
- Workers with irregular hours
- Workers on zero-hours contracts
Part-time workers are entitled to at least 5.6 weeks’ paid holiday, but this will amount to fewer than 28 days. People working irregular hours, which may include shift workers and term-time workers, are entitled to paid time off for every hour they work.
Employees who work a 5-day week must receive at least 28 days’ paid annual leave a year, which is the equivalent of 5.6 weeks of holiday.
Last year, the Supreme Court (SC) issued a long-awaited judgement in the Harpur Trust v Brazel case, ongoing since 2017. It addressed the calculation of holiday leave and pay for year-round employees working only part of the year. The case involved Mrs Brazel, a teacher on a permanent zero-hours term-time contract, exposing flaws in the current system for holiday entitlement and pay, affecting a broader range of workers, including part-timers.
Mrs Brazel’s employer, The Harpur Trust, utilised ‘the Percentage Method’ to determine her annual leave entitlement. This involved calculating her hours worked at the term’s end, taking 12.07% of that total, and compensating her at her hourly rate for the corresponding holiday pay. Consequently, this method proportionally adjusted Mrs Brazel’s holiday entitlement to align with that of a full-time worker.
The SC, affirming the Court of Appeal, concluded that the Percentage Method was incorrect. The appropriate approach, as per the Working Time Regulations 1998, involves calculating the average weekly pay over a relevant reference period (52 weeks), excluding weeks without pay, and multiplying the results by 5.6.
Following this ruling, hospitality employers must reassess their methods for calculating holiday leave and pay for part-year staff. They should also consider whether to approach employees who have received Percentage Method pay and consider providing reimbursement for any owed amounts under the Calendar Week method.
The SC’s decision raises concerns for employers, as it implies that certain part-year workers may now have a greater holiday entitlement than part-time workers with equivalent annual hours.
To address holiday entitlement disparities, the Government is considering legislation allowing employers to proportionally adjust part-year and irregular-hour workers’ entitlements. This aims for consistent and straightforward calculations. However, it’s crucial to note that this is in the consultation stage, and if implemented, new legislation may take time. Employers must continue providing 5.6 weeks entitlement for part-year workers based on the Brazel judgement in the meantime.
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