The Court of Appeal declined to overturn the EAT’s judgment, coining the term ‘part-year worker’ for those employed all year round but not working the whole year. The Court rejected the School’s argument that a pro rata principle should be applied to the accrual of leave for ‘part-year workers’; EU law did not require leave to be reduced pro rata, and it wasn’t necessary to apply a pro rata principle to the accrual of leave under the Working Time Regulations . The Court noted that not applying the pro rata principle could lead to anomalous results if ‘part-year workers’ worked a few weeks a year but still had 5.6 weeks leave per year, but if employers take on such staff on permanent contracts (e.g. due to Disclosure and Barring checks), who would not get the benefit of more leave, the advantages of permanent employment may come with additional costs in holiday pay, which wouldn’t apply to freelancers. The Court noted that the circumstances of part-year workers may vary widely (from offshore oil rigs to education), and the approach in this case is straightforward and should be followed.
CIPP comment
There is never a bad time to review processes and if you are responsible for holiday pay calculations for part-year or term-time workers, then in light of this ruling you could err on the side of caution and see if any employment contracts require revision. What we don’t yet know however, is whether this case will progress to the Supreme Court - one to watch.
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Calculating holiday pay if using the 52 week reference period 3 September 2019
From April 2020 the holiday pay reference period will be extended from 12 to 52 weeks. Guidance has not yet been published but questions are being raised about how this will work in practice.
The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018 bring into force from April 2020 (in Great Britain) a change to help ensure that those workers in seasonal or atypical roles get the paid time off they are entitled to. Where a worker has been employed by their employer for at least 52 weeks, the reference period is increased from 12 weeks to 52 weeks. Where a worker has been employed by their employer for less than 52 weeks, the reference period is the number of weeks for which the worker has been employed.
How will this actually work? Will it be a straightforward year regardless of how many weeks in that year the worker has actually been paid? Or will we have to keep going back through the weeks that include pay to reach 52 weeks?
We asked the Department for Business, Energy and Industrial Strategy (BEIS) who said that their plan is that the 52- week reference period will work much the same way as the 12-week reference period. Employers would have to count back over the last 52 weeks that a worker worked and received pay. Weeks that a worker did not work or receive pay would be excluded. If there are fewer than 52 weeks’ worth of pay information, then the employer would have to include as many whole weeks of pay information as are available. We would like to add to the response from BEIS, in that the Regulations state that there is a 104-week cap. So, it will not be necessary to go back any further than 104 weeks to find relevant weeks of pay, you would just use the number of weeks worked within that 104-week period, even if it is less than 52. No account needs to be taken of weeks preceding the 104 weeks before the beginning of the period of leave.
We will of course publish guidance through our News pages as soon as it becomes available.
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The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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