HARPUR TRUST V BRAZEL.

The supreme court ruling that could leave thousands of companies with an unexpected salary bill

The story.

Following a landmark Supreme Court ruling the way in which thousands of UK companies calculate and pay holiday pay must change. Many employers, especially those working with casual, agency or occasional workers, use 12.07% as the reliable way of pro-rating the minimum of 28 days holiday for workers whose hours were not fixed, or may only work certain times of the year.

The case.

Leslie Brazel was employed by Harpur Trust in 2002 as a clarinet teacher who would visit schools, as and when required. She only worked term times, and her hours were changeable from week to week, classing her as an irregular worker. She had initially agreed to take holiday over three set periods each year, which was calculated by working out what she had earned the previous term. From 2011, Harpur Trust changed the calculation to the percentage method – calculating all holiday owed at 12.07% of her earnings. She made a claim against the Trust which resulted in appeal by them, which has subsequently led to this important decision from the Supreme Court.

The Judges involved have agreed that 12.07% is an unlawful way of calculating holiday pay, and all irregular hours, or part year workers must have their holiday calculated from a reference period of the previous year (52 weeks). Furthermore, they must always receive the full entitlement as set out in the Working Time Regulations and the Employment Rights Act.

The impact.

All companies who use the percentage method, such as 12.07%,  must review their arrangements with workers and employees. Contracts may also need to be amended to ensure compliance with current legislation.

  • BUSINESSES WITH WORKERS ON PERMANENT CONTRACT NEED TO REVIEW HOW HOLIDAY PAY IS CALCULATED

  • EMPLOYEES COULD ATTEMPT TO CLAIM 2-YEARS BACKDATED HOLIDAY PAY

  • DISCREPANCIES OF CORRECT PAY COULD LEAD TO UNLAWFUL DEDUCTION OF WAGES CLAIMS

Leverworks are helping companies to understand their risks, control and mitigate them and update their contracts, systems & processes.

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