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Holiday pay: part-year and irregular hours workers

Proposals to pro-rata holiday entitlement for part-year and irregular hours workers (based on the annual hours they work) have been published.

As many will know, following Harpur Trust v Brazel, the Supreme Court held that, as drafted, the Working Time Directive and Working Time Regulations do not allow for prorating of holiday entitlement unless employees work part time. This means that those working part year – for instance term-time only and potentially those working irregular hours under a permanent contract, are entitled to 28 days’ holiday inclusive of bank and public holiday irrespective of how long they actually work for.

The consultation, Calculating Holiday Entitlement for Part-Year and Irregular Hours Workers, features proposals to change the law so that those working part year or irregular hours under a permanent contract are not treated more favourably and that their holiday is directly proportional to the hours worked. In essence, the proposal is to replace the 52-week reference period when weeks in which no remuneration is earned are ignored, with a 52-week reference period which includes weeks with no remuneration. In other words, restoring common sense (with respect to the Supreme Court). The consultation is relatively short and closes on 9 March 2023.

Employers in the process of changing entitlements for part-year staff should make it clear that they are only doing this because of the law as it currently stands and that if the law changes in relation to minimum holiday entitlement, they reserve the right to change entitlements again.