As you may be aware, a recent decision in the Supreme Court (Harper Trust v Brazel) will affect how we calculate holiday for any employee who works under either a zero hours contract or a part-year or term-time contract. Essentially these individuals need to be treated in the same way as full-time workers for calculating holiday pay. We can no longer use the calculation 12.07% of hours worked. Instead they are entitled to 5.6 weeks holiday regardless of how many hours they have worked.
To calculate holiday for zero hours and part-year workers going forward you must calculate their weekly pay by averaging their pay over the previous 52 weeks. You must ignore any weeks where they are on holiday, not working or on unpaid leave. This amount will be their ‘week’s pay’ and if they take a week’s holiday that is the amount you must pay them. Their annual holiday entitlement is the week’s pay times 5.6 weeks (or the equivalent higher contractual holiday) you give to a full-timer. It is worth checking the week’s pay every quarter.
The only alternative is to consult with employees who have variable working hours and agree to move them onto either part-time or fixed-term contracts with regular hours. This means their holiday would be pro rated from the 5.6 weeks (or equivalent higher contractual holiday) given to a full-timer.
For example if an employee works two days per week you would give them two fifths of a full-timers holiday or if they work 20 hours a week you would pro rate their holiday accordingly.
If you currently have staff on zero hours contracts which state that their holiday will be calculated using 12.07% of hours worked you should write to them to explain the change in holiday calculations going forward. Alternatively you may wish to consult them regarding a change to their contracts giving them regular hours.
If you have questions about how this affects your staff please get in touch via email@example.com
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This post was written by SKHR