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Insights // 13 January 2023

Calculating Paid Holiday Entitlement: The Ever-Increasing Complexities

Partner Sue Dowling, head of our Employment Law team, discusses the commencement of a Government consultation following on from last year's decision in Harpur Trust v Brazel.

It has long been recognised that, in many instances, calculating holiday pay and entitlements is excessively complex, time-consuming and challenging for employers to manage, particularly as working patterns become more flexible. Arguably, the situation has become even more difficult since the Supreme Court decision in Harpur Trust v Brazel.

In 2022, the Supreme Court held, in summary, that paid holiday entitlement under the Working Time Regulations 1998 (as incorporated into the Employment Rights Act 1996) for a permanently contracted, part-year employee (or worker), working irregular hours should not be pro-rated proportionally to the paid leave entitlement of a full-time worker. See our earlier blog article.

The decision (and its significant implications) is causing considerable concern particularly to those employers who employ such workers (for example in the education and care sectors) not only due to the increased holiday pay that will may be payable to certain employees within their organisation but also due disparities that will arise in holiday pay entitlements between different members of their workforce, working different working patterns, which may be perceived by them as inequitable, and the significant practical issues around how realistically, the method of calculation, endorsed by the Supreme Court, can efficiently and cost-effectively be implemented.

In view of the furore that the decision has caused, in particular in certain industries, it is not surprising that the Government has now launched a consultation on calculating holiday entitlement for part-year workers, working irregular hours. The consultation proposes that legislation is introduced that will allow employers to pro-rate holiday entitlement for part-year workers and workers with irregular hours, so that they only receive paid leave proportional to the total annual hours they do spending working. The consultation is open until 9 March 2023 – further information is available here.

We will be providing further blog articles on this complex and challenging subject but if you are in need of specialist legal advice, please contact our Employment Law team.

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Sue Dowling

Sue Dowling

Partner, Employment Law & Venue Licensing

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