Government addresses annual leave for part-year and irregular hours workers

Martin Cornforth, Partner in Chattertons Employment Law team, recently provided an update for the National Association of Special Schools (NASS) following their HR & Finance Special Interest Group meeting.

The update included information regarding annual leave for part-year and irregular hours workers following legislation addressing Harpur Trust v Brazel.

In the case of Harpur Trust v Brazel ("Harpur") the Supreme Court decided that the entitlement to 5.6 weeks leave applied to part-year workers regardless of the amount of work undertaken. This led to arbitrary results. For example, if A works 35 hours every other week, thus performing half as much work per year as B who works 35 hours every week, then according to Brazel, both A and B will have the same entitlement to holiday and holiday pay.

Following a government consultation, this anomaly has been addressed by The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, due to come into force on 1 January 2024.

New Holiday calculations for part-year and irregular hours workers

An accrual method for calculating holiday entitlement will be introduced for irregular hours workers and part-year workers. Entitlement will be calculated as 12.07% of hours worked in a pay period, reverting to the method commonly used before Harpur. The figure of 12.07% is derived from the fact that 12.07% is 5.6 ÷ 46.4, where 5.6 is the statutory annual leave entitlement and 46.4 is the number of working weeks in a year after statutory annual leave is deducted).

The draft regulations state that a person is a part-year worker:

if, under the terms of their contract, they are required to work only part of that year and there are periods within that year (during the term of the contract) of at least a week which they are not required to work and for which they are not paid.

And a person is an irregular hours worker:

if the number of paid hours that they will work in each pay period during the term of their contract in that year is, under the terms of their contract, wholly or mostly variable;

For most schools term-time only staff will be part-year workers.

Rolled up holiday

Rolled-up holiday pay, already commonly used, will be formally endorsed for irregular hours workers and part-year workers only. Rolled-up holiday involves paying the employee their accrued leave together with their usual wages, regardless of whether the employee has actually taken leave.

Wage slips must indicate the amount of holiday pay that has been paid for the relevant pay period.

When will the new regulations apply?

Although the Regulations come into force from 1 January 2024, they only apply to leave years beginning after 31st March 2024.

How will the amount of annual leave accrued during sick or statutory leave be calculated?

The right to annual leave continues to accrue during a sickness absence or statutory leave, such as maternity leave. The amount of statutory annual leave accrued during such periods is calculated as follows:

1. Calculate the average number of hours per week that the workerworked during the relevant period (52-week reference period) beforethe worker started the sick leave or statutory leave.
2. Calculate 12.07% of the number of hours arrived at under Step 1 to findthe number of hours of annual leave that the worker accrues duringeach week of the sick leave or statutory leave.
3. Multiply that number of hours by the number of weeks in a pay periodfor which the worker is taking sick leave or statutory leave to find thenumber of hours of annual leave that the worker accrues during eachsuch pay period.For the avoidance of doubt the 52-week reference period does not include weeks that the worker was absent on sick or statutory leave. What will schools need to do in preparation? Schools may need to amend contracts of employment to reflect the new leave entitlement for term-time only staff or for staff working irregular hours such invigilators. Schools will need to ensure that provisions are in place to pay staff correctly from the next leave year starting after 31st March 2024. This means that for many schools the provisions will need to be applied from September 2024. In the meantime, it's important to remember that Harpur remains in force and thus any schools not complying with Harpur could face claims.

Please click here to download the update with FAQs on this topic.

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