Have your say! Consultation on calculating holiday entitlement
16 January 2023
The Government has issued a consultation on proposals to deal with the impact of the Supreme Court’s decision in Harpur Trust v Brazel which confirmed that holiday pay should not be pro-rated (historically worked out as 12.07% of the hours worked) and that instead they are entitled to 5.6 weeks annual leave calculated using a 52-week reference period (up to a maximum of 104) to determine their average weekly pay, ignoring any weeks in which the individual did not work.
The effect of the Harper Trust Judgment means that in essence part year workers receive more holiday entitlement part-time workers who work the same number of hours across the year. The Government is proposing to address the complex issues raised in the case and ensure that holiday pay and entitlement received by workers is proportionate to the time they spend working.
The proposal looks to introduce a 52-week reference period which includes weeks with no remuneration, rather than exclude them as is currently the case. At the beginning of a new leave year, the worker’s holiday entitlement would be calculated based on the previous 52 weeks which would then give them their annual holiday entitlement for the new leave year. It is unclear how this would apply to workers in the first 12 months of a job whilst their reference period builds up and a method of calculation will need to be introduced.
As many of you are impacted by the judgement of the Supreme Court, you may wish to take part in the consultation which closes on the 9 March 2023. You can do so online to the consultation or by email (holidayentitlementconsultation@beis.gov.uk).
Whilst unexpected, the consultation is welcome news and given the short length of the consultation at least suggests that the Government are treating it as high priority. Our advice to date has been to follow the outcome of the Judgment and make adjustments accordingly for those affected and until laws are changed we would advise that you continue to do so to avoid the risk of incurring liabilities.
If you wish to discuss the points raised in this bulletin please do not hesitate to contact us on 01254 828300 or email us at enquiries@backhouses.co.uk. Find out more about the employment team here.
