TUESDAY BLOG

Employment Law Case: Harpur Trust v Brazel – Holiday Pay Lessons for Employers

Employment law continues to evolve, and recent tribunal and appellate decisions highlight how important it is for employers to calculate holiday pay correctly.

One significant case that continues to affect many employers is Harpur Trust v Brazel, which clarified how holiday entitlement should be calculated for workers with irregular working patterns.

What Happened?

The case involved a music teacher who worked during school terms but was engaged on a permanent contract. Her employer calculated holiday pay using the commonly used 12.07% method, which assumes workers are paid only for the hours they work.

However, the UK Supreme Court ruled that this method was incorrect for workers engaged on permanent contracts.

Instead, holiday pay should be calculated using the statutory reference period (now 52 weeks) of paid work.

Key Lessons for Employers

The ruling confirmed that employers must ensure holiday pay calculations comply with statutory requirements.

Important points include:

• The 12.07% method is not lawful for workers on permanent contracts
• Holiday pay should be based on the 52-week average pay reference period
• Employers must review contracts for part-year and irregular workers

Why This Matters

Incorrect holiday pay calculations can expose employers to:

• unlawful deduction of wages claims
• backdated holiday pay liabilities
• Employment Tribunal claims

Employers should regularly review payroll processes and employment contracts to ensure compliance.

Comment from Matthew Chilcott – Owner, Consensus HR

“Holiday pay is one of the most common areas where employers unknowingly make mistakes. Cases like this highlight the importance of reviewing payroll processes and employment contracts to ensure they remain compliant with UK employment law.”

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