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27th July, 2022

Supreme Court finally confirms 5.6 weeks holiday at full pay, even for part-year workers

On 20 July 2022, the Supreme Court handed down its long awaited Judgment on annual leave calculations in the case of Harpur Trust v Brazel.

In summary, the Judges came to the unanimous decision that the UK’s Working Time Regulations 1999 (“WTR”) require that all workers on permanent contracts must receive 5.6 weeks annual leave at full pay, even if they do not work all year round, such as term-time or seasonal workers. Employers must ignore any weeks not worked, when working out the worker’s average weekly pay.

Alternative methods of calculating annual leave, by pro rating the amount of leave in accordance with the number of hours or days worked, the “12.07% method”, or a more complex “worked year” method were rejected by the Supreme Court as incompatible with WTR.

As a consequence, holiday pay should be based on average pay during working weeks and although that will often result in workers with atypical working patterns receiving a higher proportion of their annual pay for leave than workers with normal working hours, the Supreme Court determined that the slight favouring of these type of workers is not sufficient to be incompatible with the EU Working Time Directive, which does not prevent the UK from making more generous provisions.

This hugely important decision will likely mean that thousands of workers have been underpaid holiday and there may be many prospective claims to come, though it does not affect part-time workers with set hours, eg. a 3 day working week contract.

Employers may wish to review the terms of employment of any workers contracted to work for the whole year but work short of the whole year.

If you require any advice or support in relation to the effects of this Judgment, or wish to review and update your employment contracts accordingly, please get in touch with Michael Redston or Debbie Coyne on our Employment Team for our assistance. Keep an eye out for our regular Employment Newsletter for more details of this case and our top tips.

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