No pro-rating of holiday pay for term-time only teachers on permanent contracts

The recent case of Harpur Trust v Brazel witnessed the Court of Appeal attempting to clarify the complex issue of holiday pay for teachers on zero hours contracts who work only during term-time.  Peripatetic music teachers are an obvious example of teachers who are likely to fall into this category.  The issue concerns the treatment of school holidays in the calculation of holiday pay.

The law states that all workers must get a minimum of 5.6 weeks of paid holiday a year.  During those 5.6 weeks, they must receive a week’s pay for each week of holiday.  For staff working irregular hours, a week’s pay is taken to be their average weekly pay in the preceding 12 weeks, excluding all weeks in which they were not paid.  This means that the weeks that fall during school holidays, during which term-time only staff are not being paid, cannot be considered when calculating holiday pay.

A common method for calculating holiday entitlement for staff on zero hours contracts is to calculate accrual on the basis of 12.07% of the hours the employee has worked.  This method can work well for staff who are employed throughout the whole year; however in the case of term-time only staff, it can result in holiday pay being capped at 12.07% in instances where an application of the 12 week rule would in fact require a higher rate of holiday pay.

The Harpur Trust case concerned a part-time clarinet and saxophone teacher who was employed at Bedford Girls School.  She was employed on a zero hours contract in which her hours varied each week and she was only paid for the hours she actually worked.  Crucially, she only worked during term-time and she was required to take her accrued holiday during the school holidays.  At the end of each term, the school would pay her holiday pay at a rate of 12.07% of the hours she had worked that term.

The teacher brought a claim.  She argued that under the 12.07% calculation she had been underpaid her holiday pay.  She claimed that the correct application of the 12 week rule would see her holiday pay entitlement sometimes rising as high as 17.5% and that the School had unfairly pro-rated her holiday pay to account for her term-time only work.  The employment tribunal dismissed her claim and said that the School was entitled to pro-rate her holiday pay.

The teacher appealed to the Employment Appeal Tribunal, which ruled that the first tribunal had been wrong.  This resulted in the School bringing the case to the Court of Appeal.  The Court of Appeal dismissed the School’s appeal.  It said that there was no basis in law for the School to pro rate holiday pay for term-time only employees.  It confirmed that where a member of staff works only during term-time, their holiday pay must be calculated based on their average pay from the preceding 12 weeks in which they were paid.  It should not be pro-rated to take account of the school holidays.  The Court made clear that their ruling applies only to members of staff who are on permanent contracts.

This case has clarified that the 12.07% method is not suitable for staff on permanent contracts who work only during term-time or whose hours are confined to when the School is in session (”part-year workers” in the Court’s phrase).  The publicity that has surrounded the case is likely to result in schools witnessing further claims from term-time only employees on permanent contracts (whether zero hours or otherwise), which could prove costly for schools.  Other part-year workers may also consider claims given the current uncertainty in this area.  The Government and Acas are likely to produce some guidance on this issue; however in the meantime schools are advised to look at how they calculate their holiday entitlement for their term-time only staff and risk assess the extent of any historic liabilities.