Government Consultation on Calculating Holiday Pay Entitlement for Part-Year and Irregular Hours Workers

On 12th January 2023 the Government announced a consultation on calculating holiday pay entitlement for part-year and irregular hours workers.

Reason for the consultation

This consultation follows the Supreme Court’s judgement in July 2022 in the case of Harpur Trust v Brazel.    

The judgment held that: 

• The correct interpretation of the Working Time Regulations 1998 is that holiday entitlement for part-year workers should not be pro-rated so that it is proportionate to the amount of work that they actually perform each year.  
• Part-year workers are entitled to 5.6 weeks of statutory annual leave calculated using a holiday entitlement reference period to determine their average weekly pay, ignoring any weeks in which they did not work.  

As a result of this judgment, part-year workers are now entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year. 

Currently, only the last 52 weeks (going back 2 years) in which an individual undertook any work are used to calculate the holiday pay for part year and irregular hours workers.  Weeks in which no work was undertaken are ignored.    

 Scope of Consultation 

The government are proposing that to introduce a 52 week holiday entitlement reference period which includes weeks worked and not worked when calculating the annual leave someone is entitled to receive.   

The government is also consulting on the calculation of holiday entitlement for agency workers.   

The consultation documents can be accessed here.  The consultation closes on 9th March 2023 and customers may wish to consider providing a response to this.