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Landmark Supreme Court decision rules holiday pay for part-year workers should not be pro-rated

Makbool Javaid, Partner - Simons Muirhead & Burton

The UK Supreme Court earlier this week sided with the Court of Appeal in the case of a school music teacher engaged on a zero-hours contract providing lessons during term times. The ruling has implications for holiday leave and pay calculations for contingent work arrangements, employment businesses and others that employ workers on permanent contracts who work part of the year.

The appeal raises an important issue about the statutory leave requirement for part-time workers who may also be described as part-year workers, namely workers who work for varying hours during only certain weeks of the year but have a continuing contract throughout that year. These workers neither work the full number of hours worked by full time workers nor the full number of weeks worked by part time workers. Their work is irregular.

The issue is whether their leave entitlement is calculated on the same principle, proportionally, as full-time employees (which would mean that the weeks that they do not work reduce their entitlement) or whether their leave must be calculated ignoring those weeks. The latter would leave them with an entitlement which proportionally exceeds that of other employees. Nonetheless, the Court of Appeal held that the proper construction of the domestic law led to that result and further that such a construction was consistent with the applicable EU law.

The fundamental take-home message is that holiday entitlement can no longer be pro-rated for permanent zero-hours or part-year workers to reflect the number of weeks employees work each year – there is now an automatic entitlement to 28 days (or 5.6 weeks) holiday entitlement per annum.

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