The Government has published a consultation paper on proposals to deal with the impact of the Supreme Court’s decision in Harpur Trust v Brazel that employers cannot calculate holiday pay for part-year (e.g. term time and zero hours) workers as 12.07% of the hours worked.
Part-year workers are instead entitled to 5.6 weeks of paid annual leave calculated using a 52-week reference period to determine their average weekly pay, ignoring any weeks in which they did not receive any remuneration.
The impact of Harpur is that part-year workers are entitled to a greater holiday entitlement than part-time workers who work the same total number of hours across the year.
Workers who work only a few weeks in a year receive the largest increase in holiday disproportionate to the hours worked.
The Government proposes to address this disparity by replacing the 52-week reference period which ignores weeks in which no work is performed, with a 52-week reference period which includes weeks in which no work is performed.
This would ensure that holiday pay and entitlement received by workers is proportionate to the time they spend working during the year.
The consultation seeks to understand the implications of the judgment on different sectors including agency workers who have complex contractual arrangements.
The Government wants to ensure that any changes it considers does not have any adverse impacts on other parts of the legislation.
Its impact assessment calculated that this change will save businesses £113m per annum.
The consultation closes on 9 March 2023 and we will keep you advised of any further updates.