Part time workers calculation of annual leave

 

As reported in the BBC News last month, one cleaner who initially raised a grievance with her employer, was then joined in a tribunal claim by approximately 5,000 female staff in schools and nurseries across Greenwich, when they took on their employer (Greenwich Council) in a five year legal battle over holiday pay. They complained that the Council were paying less holiday pay to them on a pro-rata basis, compared to the amount received by their full-time equivalent colleagues.  The case was centred on staff employed in schools and nurseries working during the term-time only (who were effectively part-time workers, due to working less than full-time hours i.e. the 39 term time weeks in the year only, rather than 52 weeks). They argued in their employment tribunal claim that they had been losing over four days’ holiday pay a year due to the Council’s failure to calculate their annual leave properly, as the Council were using an incorrect formula.  The Council had included in their formula the days worked per year plus the amount of holiday entitlement per year. The Claimants’ view was that the formula should exclude the holiday entitlement per year, such that only worked weeks should be considered in the formula for calculating their holiday, rather than worked weeks plus annual leave. 

Readers may be familiar with the formula used by many employers use for calculating casual hours’ workers holiday entitlement on the basis this accrues at 12.07% of hours worked.  This commonly used formula is based on 5.6 weeks’ holiday being 12.07% of 46.4 weeks, which is the 52-week year minus the 5.6 weeks' holiday entitlement.  Whilst this formula is not set out in law, it is a rule of thumb that makes the calculation of holiday entitlement simpler for those with irregular working patterns.

However, we do not know the tribunal’s view on the correct formula for calculating holiday pay in this case of part-time term time only workers, as the claimants received out of court settlement payments from the council to avoid the expense and exposure of permitting the case to proceed to a hearing.  Since then Greenwich Council has agreed to revise the formula used to calculate holiday allowances.

Comment

The legal minimum holiday to which all workers are entitled (whether full-time or part-time) are 5.6 weeks' paid leave. For workers who work five days per week (i.e. full-time), this equates to 28 days' paid leave each year.  For part-time workers who work set hours or days each week their holiday allowance is relatively straight-forward to calculate.  For example, a part-time worker who works three days a week is entitled to a minimum of 16.8 days’ annual leave per year. This is because one week for this employee is three days and not five. There is no requirement to round up entitlements to the nearest full day, although it is usually easier to do so for administrative purposes. However, employers cannot round the entitlement down to the nearest day.

Unfortunately, as stated above, the regulations that apply to holiday and part-time workers do not set out any precise formula for calculating holiday pay for part-time workers where they do not work fixed hours or days each week, or work during term-time only. This also presents difficulties for accurately calculating holiday entitlement for those who work part-time hours on an ad-hoc basis, such as those employed on zero hours’ or casual hours’ contracts. 

Regulations for the protection of part-time workers state that they should not be treated less favourably than a full-time counterpart, unless the difference in treatment can be justified on the grounds that it has nothing to do with the worker’s part-time status. Any less favourable treatment could result in part-time workers pursuing a claim in the employment tribunal and it would be for the employer to justify the less favourable treatment to the tribunal.

Tags annual leave, holiday, holiday pay, sme, markel law