The claimant, a visiting music teacher on a permanent contract, worked during term time. She worked on average 32 weeks per year (which fluctuated based upon the number of children enrolled). The issue arose in relation to holiday entitlement. The respondent (appellant) Trust used ACAS Guidance and paid her one third of 12.07% of her overall earnings. The claimant argued that it was not lawful with the Working Time Regulations. Instead, she argued that she should receive the average weekly remuneration for the previous twelve weeks. 

Both the EAT and the Court of Appeal agreed with the claimant with Underhill LJ stating that the Working Time Regulations 1998 did not allow for pro-rating of holiday pay for permanent employees. Under Section 224 of the Employment Rights Act 1996 (s. 20 of the Employment Rights (NI) Order 1996) the claimant was deemed to have no normal working hours and the 12 week average should be used. The Trust appealed this decision to the Supreme Court. 

Lady Rose and Lady Arden gave the judgment which dismissed the appeal. The main thrust of the argument by the Trust was that the use of the 12 week average gave the claimant a more favourable position than what full-time members of staff would receive. In some instances, it would lead to approximately 17% of her earnings being holiday pay. The judgment outlined that the Working Time Directive and its transposition as clear when it came to workers with no normal hours in that the previous twelve weeks should be used as the basis to determine the rate of holiday pay. On the argument that it led to absurd results, it was held that whilst the result may not have been intended by Parliament it was not such that some ‘slight favouring of workers with a highly atypical work pattern’ should not be deemed to be so absurd that it requires a revision of the statutory scheme. There are situations in which general rules will provide some anomalies. The Supreme Court did acknowledge that such a right was not required under the Working Time Directive but that there was nothing to prohibit more generous provisions for workers within domestic law (which is the case under the Working Time Regulations). 

Accordingly, the use of Section 224 of the 1996 Act which sets out the calculation of an average week’s pay was a policy choice made by Parliament which meant the number of hours worked affects the amount of a week’s pay in some circumstances but not in others. The last substantive paragraph of the judgment made this clear in stating: 

‘In short, the amount of leave to which a part-year worker under a permanent contract is entitled is not required by EU law to be, and under domestic law is not, prorated to that of a full-time worker.’ 

As a result, the appeal was dismissed. 

Practical Lessons

This decision of the Supreme Court is very likely to have great ramifications on how holiday pay is calculated for staff who work for particular parts of the year. Indeed, it may be difficult for employers to explain how a part-time member of staff is receiving a greater sum of holiday pay than a full-time member of staff when it is examined alongside overall earnings. Employers may also have to be cognisant of the possibility of historic underpayments and resolving those matters with employees. It will mean that an individual who works full-time for 12 weeks will then receive a better holiday package as a result rather than it being calculated with reference to accumulating length of absence. The fact that the Supreme Court recognises the possibility for ‘anomalies’ and ‘absurdity’ may be such that this aspect of the Working Time Regulations could be reformed in the future but that would be a matter for Parliament.  

Find the full judgment here: https://www.supremecourt.uk/cases/docs/uksc-2019-0209-judgment.pdf  

For a Review of the Court of Appeal decision: https://www.legal-island.com/articles/uk/case-law/2019/aug/the-harpur-trust-v-brazel-2019/