It is well established that part-time workers receive a full timer’s entitlement to pay but on a pro-rata basis. The Court of Appeal has now held that when it comes to holiday entitlement, the pro-rata principle does not apply for a 'part year' worker. Such a worker is someone who only works for part of the year, for example term time only, but is nevertheless on a permanent contract with the employer.
It is often assumed that such a worker's holiday entitlement and pay should be pro-rated as if they were someone working part-time hours. Indeed, the relevant ACAS guidance suggests people who work on a 'casual basis' should have a holiday entitlement of 12.07% of the hours they work over a year. This is because the required 5.6 weeks holiday in the Working Time Regulations 1998 (WTR) amounts to 12.07% of the 46.4 weeks a full-time person works in a year. The Court of Appeal has now clarified that this pro-rata percentage only applies to part-time workers. Rather, for a part-year worker, the WTR does not look at averages over the year but at the actual work completed. The calculation is a simple formula set out in the WTR – namely establishing the worker's 'week's pay' by looking at their average pay over the last 12 weeks and then multiplying this by 5.6. Further:
This means that a part-year worker will often be more favourably treated in terms of holiday pay. Rather than having an average taken over a year in which they do not fully work, their holiday pay is based on weeks actually worked and multiplied by 5.6. In practice this might mean that their proportion of holiday pay is more favourable than that of a full-time worker but these are people who do not have the benefit of a full-year contract. The Court of Appeal has held it to be quite reasonable.
If you employ part-year workers, look at their ‘week’s pay’ and multiply it by 5.6. It is that simple...