Employment Appeal Tribunal finds term time only worker’s salary breached National Minimum Wage requirements

The Employment Appeal Tribunal recently delivered its decision in the case of Lloyd v Elmhurst School. Ms Lloyd was employed as a part-time learning assistant at the school. Her salary was paid in 12 equal monthly instalments. She worked 21 hours per week, during term time only, which equated to 36 weeks per year. Her contract entitled her to take “the usual school holidays” as “holidays with pay”. Ms Lloyd brought a claim for unlawful deduction from wages on the basis that she believed her hourly rate of pay had fallen below National Minimum Wage (NMW).

Calculating the rate of pay

The school argued that for the purpose of calculating Ms Lloyd’s hourly rate, her “basic hours” included the 21 hours she worked over 36 weeks of the year, plus the statutory minimum holiday entitlement. Ms Lloyd argued that her “basic hours” comprised of 21 hours over 52 weeks, as her contract entitled her to take all school holidays as paid holiday. The practical effect of these two arguments was that, if the school’s argument was accepted, then Ms Lloyd’s hourly rate exceeded the NMW, however if Ms Lloyd’s argument was accepted, then the hour hourly rate fell short of the NMW.

The Employment Tribunal agreed with the school’s line of argument and dismissed the claim. However, Ms Lloyd appealed to the Employment Appeal Tribunal, which has upheld the appeal and found in Ms Lloyd’s favour.  

The Employment Appeal Tribunal’s findings

The Employment Appeal Tribunal held that the impact of the contractual entitlement to take all school holidays as paid holiday was that it was wrong to focus simply on Ms Lloyd’s working hours when calculating her hourly rate of pay for NMW purposes. Non-worked weeks of contractual holiday needed to be taken into account, in addition to periods of statutory holiday. 

What does this mean for schools?

The decision in this case should be taken as a warning by schools to take care when preparing the wording of their contracts for term time only staff. It is always advisable to draw a distinction between periods of paid holiday and the remaining weeks of school holiday periods when term time only staff are not contracted to work. This is particularly important where term time only staff are on low salaries, as a failure to get this right could result in a finding of a failure to pay NMW.

How Moore Barlow can help

Schools should feel free to get in touch with the Independent Schools Team if they would like a review of their term time only contracts, or if they would like advice on how to manage the salaries of any term time only staff who have been given a contractual entitlement to take all school holidays as paid holiday.