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Landmark ruling for term-time workers holiday pay calculations
05 Aug 2022

Many people work term-time only but have a contract that runs throughout the year. Employers should not change holiday pay calculations to leave these workers worse off, says Julia Fitzsimmons, head of employment law at FBC Manby Bowdler

A landmark court ruling means that term-time workers with year-round contracts should have their holiday pay calculated properly – even if that means they are treated more favourably than those who work all year.

The case was brought after a music teacher found herself worse off when her employers changed the way they calculated her holiday pay.

She works variable hours during term-time only but has a year-round contract, which stipulates that her holidays have to be taken during school holidays.

All employees are entitled to 5.6 weeks holiday each year, and holiday pay should be calculated by multiplying an average of the previous 12 weeks’ pay by 5.6 weeks (12.07% of termly earnings) - but weeks without earnings should be ignored when calculating the average.

This process is set out in s224 of the Employment Rights Act 1996.

In 2011, the teacher’s employers changed their calculation method to 12.07 per cent of termly earnings. As this included weeks when nothing was earned, the teacher was left with less holiday pay.

She brought an unlawful deduction from wages claim, which she initially lost at tribunal but won on appeal to the Employment Appeal Tribunal. The Court of Appeal and the Supreme Court agreed with the EAT.

The Supreme Court judgement said there was nothing in the Part-Time Workers Regulations that meant part-time workers could not be treated more favourably than those working all through the year.

Employers should however be aware of how any change in policy or introduction of new policies may impact on part time employees or staff teams with differing roles and responsibilities.

If you need any legal advice about holiday pay policies, please contact Julia Fitzsimmons at julia.fitzsimmons@fbcmb.co.uk

Meet Julia Fitzsimmons