You are right that the government has begun consultation into reversing the impact of the Supreme Court Harpur Trust decision. By way of a reminder, this decision impacted those who employ staff on the following basis:
– Bank /casual
– Term-time only
– Variable / zero hours
Employing even one of the above brings the organisation into the scope the Harpur Trust case.
Harpur Trust v Brazel
This case concerned the calculation of holiday pay and entitlement of a permanent part-year worker on a zero-hours contract. It held that the correct interpretation of the Working Time Regulations 1998 is that holiday entitlement for part-year workers should not be pro-rated to be proportionate to the amount of work that they actually perform each year.
As a result, they are now entitled to a larger holiday entitlement than part-time workers who work the same total number of hours across the year.
The Department for Business, Energy and Industrial Strategy (BEIS) launched an 8-week consultation on 12 January 2023 seeking views on proposals to pro-rata holiday entitlement for part-year and irregular hours workers based on the annual hours they work. The deadline for submitting comments is 9 March 2023.
BEIS proposes the introduction of a holiday entitlement reference period for part-year and irregular hours workers, to ensure that their holiday pay and entitlement is directly proportionate to the time they spend working. This will involve calculating hours worked in the previous 52 weeks and multiplying them by 12.07% to find a part-year workers annual statutory entitlement in hours. Note that under these proposals, the reference period would be 52 calendar weeks, including any weeks in which no work was performed. This differs to the calculation for pay, where employers must use 52 weeks in which work was performed (going back up to 104 weeks if necessary). There are no proposals to change how holiday pay is calculated.
It also wants to understand how entitlement is currently calculated for agency workers and how the consultation proposal might be implemented.
What does this mean?
The launch of the consultation shows the government recognises that that the way the law is written creates unintended anomalies which need to be rectified. The effect of this may see part-year workers treated comparably to part-time workers in their annual leave entitlement.
When will it take effect?
Your clients do not need to now suddenly change what they are doing. Decisions made by the Supreme Court are binding, and they cannot be appealed. As such, the government will have to introduce new legislation to put in place their proposals. As this will involve a lengthy period of debate and review in parliament, it is unlikely to come into force for some time. For now, the law remains the same, and your clients not giving 5.6 weeks annual leave entitlement to part-year and irregular hours staff may face claims for unlawful deduction of wages.
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