Fusion UK Payroll - Holiday Pay for Employees and Workers Who Work Irregular Hours (Doc ID 2897440.1)

Last updated on DECEMBER 06, 2022

Applies to:

Goal

The following is provided for advisory purposes only. It is not intended to be exhaustive legal guidance but to provide the context of why actions might be required.
You will need to liaise with your Implementation Partner(SI) for the configuration changes required.


The recent case of Harpur Trust v Brazel [2022] UKSC21 clarified the law in relation to pro-rated holiday entitlement. The case involved a music teacher who worked during school term time only. This meant that she only worked for part of the year. Accordingly, her employer calculated her holiday entitlement on a pro-rata basis (12.07% of her hourly rate). However, Miss Brazel argued that her holiday entitlement should be calculated based on her average weekly pay excluding the weeks that she had not worked.

The Supreme Court concluded that the "calendar week method" is the correct way of calculating holiday entitlement which is compliant with Working Time Regulations and the Working Time Directive.

In consideration of Supreme Court’s ruling, pro-rating holiday entitlement is no longer a lawful way to calculate holiday pay.

Whilst it is important to note that this change does not apply to part time workers who work regular hours it does create an action for employers who engage workers on irregular hours, especially those who do not work every week and who currently calculate their holiday pay based on 12.07% of the hours worked.

Employers who engage workers on zero-hours contracts or workers who don’t work every week of the year (e.g. term time workers) will now need to ensure they are using the “Calendar Week Method” correctly.

The holiday pay reference period starts from the last whole week ending on or before the first day of the period of leave. This will typically be a week from Sunday to Saturday.

The reference period is 52 weeks counting back up to a maximum of 104 weeks if there are any unpaid weeks. The determined rate is then applicable for the duration of the leave.

Solution

My Oracle Support provides customers with access to over a million knowledge articles and a vibrant support community of peers and Oracle experts.