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P ayroll professionals will tell you that calculating holiday pay and entitlement can be one of the most challenging areas of their roles. While it may seem straightforward for those with a fixed salary, whose pay rarely fluctuates, establishing what holiday pay is due to workers with variable pay can be a whole different ball game. The recent Supreme Court judgment on the case of Harpur Trust v Brazel highlights the importance of ensuring holiday pay is dealt with correctly, and this article will provide an overview of the case, discussing what can be learnt from it. Remember, dealing with complicated elements of payroll such as this is what makes you all true payroll heroes . Let’s talk calculation methods… When calculating holiday pay for casual or zero-hour workers, the correct method to use is the calendar week method. This involves using the 52-week reference period prior to the holiday to calculate average weekly pay. If there are weeks in which no pay was received, then those weeks should be disregarded, and you can look back up to a maximum of 104 weeks to gain a full 52-week period. You mustn’t look back any further than the 104-week cap. If the total weeks worked since the employment began, or those that are available in the 104-week ‘look back’ period are less than 52, the calculation for determining the average weekly pay should be adjusted accordingly. This will be based on the number of worked weeks available. It’s worth noting, for the purposes of examining this particular case, that the reference period prior to 6 April 2020 was 12 weeks. It only became 52 weeks from 6 April 2020 onwards. The details of the case Lesley Brazel was a term-time worker, on a zero-hour contract, who worked irregular hours. She received holiday pay relating to her worked hours in three tranches throughout the year, paid at the end of each term. She disagreed with Harpur Trust when it made the decision to alter how her holiday pay was calculated. In September 2011, the Trust opted to begin using the 12.07% calculation method, based on the Advisory, Conciliation and Arbitration Service (ACAS) guidance available at the time. This method, where
It ain’t no holiday… the importance of getting holiday pay right
The CIPP’s policy and research team discusses the ruling of the landmark Harpur Trust v Brazel case, and considers its implications for payroll teams
| Professional in Payroll, Pensions and Reward | September 2022 | Issue 83 54
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