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Government consulting on how annual leave is calculated for part-year workers

Kate Palmer, HR Advice & Consultancy Director at Peninsula

Last July, the UK Supreme Court decided that annual leave entitlement could not be pro-rated for part-year workers. This meant workers on a term-time, zero-hours or irregular hours contract are entitled to receive 5.6 weeks’ paid annual leave regardless of how many weeks per year they worked.

But the Government has recognised the anomalies this may bring so are now taking steps to review and potentially amend legislation to ensure leave entitlement is proportionate to working hours.

The consultation opened today and will close in 8 weeks on 9 March 2023. Kate Palmer, HR Advice and Consultancy Director at Peninsula, says “Launching this consultation shows that the Government recognises that the way in which the law is written creates unintended anomalies that need to be rectified.

“The fact that the consultation period is only open for eight weeks suggests they are putting a high priority on resolving the issue quickly and introducing amendments.

“The Government proposes legalising the 12.07% method, to ensure that leave entitlement is proportionate to working hours, as well as using a 52-week reference period, including non-working weeks, to calculate leave entitlement.

“Effectively this could see part-year workers treated comparably to part-time workers in their annual leave entitlement.

“Under current laws, part-year workers can receive considerably more leave and pay than that of a part-time worker despite working the same number of hours in total over the course of a year.

“Any changes to current legislation will be particularly important for those in the education sector who commonly use term-time contracts. However, it could also pose a new HR headache for any employer who has zero-hours, variable-hours, or agency staff.

“Changing the law can be a lengthy process, but employers should continue to calculate and provide leave in line with the ruling in the Harpur Trust v Brazel case until we know the outcome of this consultation.”

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