On 20th July, the Supreme Court dismissed an appeal by Harpur's Trust unanimously, making 12.07% formula for pro-rata holiday pay redundant. Holiday pay for casual but permanent workers must now be calculated at 5.6 weeks of each week of pay.
In Harpur’s Trust v. Brazel case the Supreme Court identified multiple problems with the Harpur Trust’s proposed alternative calculation methods, stating they were directly contrary to the statutory method set out in the working time regulations. It said its methods would require employers to keep detailed records of every hour worked, even if employees were not paid at an hourly rate.
Therefore, the Supreme Court concluded that the amount of leave to which a part–year worker under a permanent contract is entitled is therefore not required to be, and under domestic law must not be, pro–rated to be proportional to that of a full–time worker.
This means that their leave must be calculated ignoring those weeks not worked, even though it results in individuals having a leave entitlement which proportionally exceeds that of full-time workers.
Employers, including certain staffing companies, online staffing platforms and umbrella companies, will now need to revisit their contractual arrangements and holiday-pay calculations for part-year workers, as well as understanding any existing liabilities for unlawful deduction of wages and/or under the Working Time Regulations (WTR).
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