Just when you thought the dust had settled on all things “holiday” related following last year’s landmark Supreme Court decision in Harpur Trust v Brazel, along come the government and look to (potentially) shake things up.
What did the Harpur Trust case say?
Remember! The Harpur Trust case set out clearly how holiday pay should be calculated for part-year workers whose hours of work vary but who have permanent contracts.
The general rule is that if you use the 12.07% method to calculate holiday pay, you’re doing it wrong. Instead, the only correct way to calculate holiday pay for these types of workers, is to calculate the average pay over the 52 weeks before the holiday is taken – but ignore weeks in which no work has been done.
What is the government’s latest consultation all about?
The government are now looking to shake up the rules around holiday entitlement for part-year and irregular workers. They’ve opened a consultation seeking views on whether the 5.6 weeks’ statutory holiday entitlement that all workers are currently entitled to should remain for part-year and irregular workers.
Instead, the government have come up with their own proposals for how holiday entitlement should be calculated for those who are part-year or irregular workers. That’s right – the government are looking at changing holiday entitlement rather than holiday pay calculations.
The government are proposing that holiday entitlement for part-year and irregular workers should be calculated by adding up all of the hours the worker has worked over the previous 52 weeks (including weeks where no work is undertaken) and then – hold on to your hats – calculating it by 12.07%. This would give a pro-rated holiday entitlement which would be expressed as hours.
The government are proposing that this calculation would be carried out once at the start of each holiday year, instead of every time holiday is taken.
The proposals would not, however, remove the need to carry out the usual calculations required for figuring out holiday pay for those part-year workers or those with irregular hours. That will remain untouched, regardless of the outcome of this consultation.
The government’s consultant closes on 9th March 2023. To respond to that consultation, you can respond online at https://beisgovuk.citizenspace.com/lm/holiday-entitlement or via email to holidayentitlementconsultation@beis.gov.uk.
What about Brexit?
Yes, I know – years later talk of Brexit is still around, particularly for HR practitioners and employment lawyers.
Nowadays, most of the conversation is about the EU Law (Revocation and Reform) Bill which we are expecting to be made law in the next few months. That bill, if it becomes law, will revoke any EU-derived legislation unless the government replaces it by the end of 2023.
Holiday pay and holiday entitlement are in scope for this legislation and so, technically, the government could re-write the UK’s holiday scheme completely. We doubt very much that they’d scrap what’s in place already and start again. What we might see, though, is some modifications to the UK’s statutory holiday scheme and this consultation might be the first step to allowing that to take place.
We’ll keep you updated on a response from the government as and when we get it.
And whilst we’re on the topic of holidays…
Don’t forget! This year there’s an extra bank holiday on 8th May 2023 for the King’s coronation.
As we saw last year when we got an extra two bank holidays, there’s lot to consider when thinking about whether staff have the right to time off for the bank holiday.
To refresh your memory on when staff have a right to a day off, take a look at our article from last year about additional bank holidays: https://bmcprecept.com/additional-bank-holiday/
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