The Court of Appeal has confirmed the decision of the EAT in this case, which we reported on in March 2018, that part-time workers may receive proportionately greater holidays than their full-time counterparts.

The claimant, a visiting music teacher, was employed by the respondent on a zero-hours contract, under which her weekly hours fluctuated, and she was required to take annual leave during the school holidays.

The claimant’s contract of employment allowed for 5.6 weeks’ annual leave, mirroring her statutory entitlement. Instead of calculating the basis of her holiday pay by applying Regulation 16 Working Time Regulations 1998 and section 224 Employment Rights Act 1996, the respondent calculated it on the basis of 12.07% of her total pay over a year. (The equivalent legislation in NI is Regulation 20 of the Working Time Regulations (Northern Ireland) 2016 and Article 20 of the Employment Rights (Northern Ireland) Order 1996).

The employer relied on Acas guidance (GB) to this effect, which states that the statutory holiday entitlement of 5.6 weeks equates to 12.07% of hours worked over a year. The respondent argued a part-time employee who only works part of the year should have his or her 5.6 weeks' holiday entitlement pro-rated to reflect the weeks that he or she actually works to ensure that full-time employees are not treated less favourably, and to avoid a "windfall" for term-time only workers. The claimant argued that she should receive paid annual leave based on an average of her hours worked in the 12 weeks prior to taking leave (the applicant’s calculation would net holidays worth some 17.5% of her annualised hours/pay).

The original tribunal ruled in favour of the school, arguing that it deemed it necessary to read wording into the Regulations. It concluded that application of the pro-rata principle was appropriate and that the statutory scheme by which a week's pay was computed should, in the case of part-time workers who work fewer than 46.4 weeks per year, be read down such that holiday payment should be capped at 12.07% of annualised hours. The EAT overturned that and referred it back to the tribunal to re-calculate entitlement by application of section 224 ERA.

The Court of Appeal has upheld the EAT’s decision. It was not convinced by the employer’s arguments that “the Claimant works only 32 weeks of the year and yet, on her case, was entitled to holiday/holiday pay calculated on the same basis as if she worked 46.4 weeks. To put the same point another way, the holiday pay to which, on her case, she was entitled would be a much higher proportion of her actual earnings than if she worked full-time: on the basis of a 32-week year it would be 17.5%, while the holiday pay of a full-year worker is, as we have seen, only 12.07% of their earnings.”

The position was clear:

“The WTR do not provide for the kind of pro-rating for which the Trust argues and which underlies the application of the 12.07% formula in the case of a part-year worker. The exercise required by regulation 16 and the incorporated provisions of the 1996 Act is straightforward and should be followed.”

In discussion, Lord Justice Underhill, who gave the lead judgement, said:

“I accept that applying the terms of the WTR without a pro rata reduction for part-year workers will produce odd results in extreme cases… but general rules sometimes produce such anomalies when applied in untypical cases. I would expect it to be unusual for workers whose services are required for only a few weeks a year to be employed on permanent contracts, as opposed to being engaged on a freelance basis. We were told that schools sometimes resort to this expedient because the requirements for safeguarding clearance via the Disclosure and Barring Service are less onerous in the case of permanent employees. The ET made no findings on the point, and the details were not explained to us; but even if it is correct it does not seem to me particularly inequitable that employers who choose to retain on permanent contracts workers whom they could have engaged freelance, because doing so has particular advantages, should have to accept the additional costs that come with that choice. In any event, whether the practice is common or not, the arguably anomalous entitlements of workers of this kind do not seem to me to be sufficient to require the application of the pro rata principle generally…”

Practical Lessons

This case confirms that permanent ‘part-year’ workers, e.g. term-time workers are entitled to receive 5.6 weeks leave per year, regardless of the number of weeks they work in the year.  The Court of Appeal for England & Wales has ruled that EU Law (and the UK Regulations) does not permit any pro-rating to reduce the entitlement to reflect the actual number of weeks worked in the year:

“… it seems to me plain that the EAT reached the right decision. On any natural construction the WTR make no provision for pro-rating. They simply require, as the Claimant says, the straightforward exercise of identifying a week's pay in accordance with the provisions of sections 221-224 and multiplying that figure by 5.6. Attempting to build in a pro-rating requirement or an accrual system would not… be an exercise in construction (even of the Marleasing type, were that available) but the substitution of an entirely different scheme.”
https://www.bailii.org/ew/cases/EWCA/Civ/2019/1402.html