A recent ruling in the highest court in the land has headlines for its decision on annual leave for term-time teachers and supply teachers. Also, it has reinforced the notion that employers should use the calendar week method when calculating annual leave pay for part-year employees.

Background

This case relates to holidays taken nine years before this case reached the Supreme Court (the wheels of justice turn slowly). A teacher, Mrs Brazel, was a visiting music teacher at Bedford Girls’ School. Due to the nature of her job, she was classed as a ‘part-year’ worker. This means a teacher who works irregular hours during term-time. As part of her contract, she had to book holidays outside of the academic terms, i.e. in school holidays. Both parties accepted that her annual leave would take place during the Winter, Spring and Summer holidays. This meant that she would receive her annual leave pay in three separate instalments.

For guidance on pay, employers generally need to follow statutes such as the Working Time Regulations.

Before the UK’s exit from the European Union, the Working Time Directive covered statutory leave for workers. This required the UK to bring in the Working Time Regulations 1998. Under this law, employees are allowed 5.6 weeks of annual leave per year.

The main issue of this case was how to calculate the holiday entitlement.

The case has particular relevance to annual leave for term-time teachers because it applies to those:

• who work for varying hours
• during only certain weeks of the year but
• who have a continuing contract throughout that year.

These workers don’t work the full number of hours worked by full-time workers; nor do they work the full number of weeks worked by part-time workers. Their work is irregular. The issue is whether to calculate their holiday entitlement on the same principle (proportionally) as full-time employees (which would mean that half-term and the Summer holidays reduce their entitlement) or whether to calculate it ignoring those weeks (leaving them with an entitlement which proportionally exceeds that of their full-time colleagues).

Methods to decide on pay

Before September 2011, the school used the calendar week method from s224 of the Employment Rights Act 1996. This involves using an average week’s pay from the last 12 weeks (ignoring any weeks with no pay). That 12-week period is now a 52-week period, by the way. The school worked out her earnings during the 12 term-time weeks before the school holiday, divided that by 12 and paid her 1.87 times that weekly average. Why 1.87? Since there are three terms and three holidays, the school divided 5.6 weeks of holiday by three (which works out to be 1.87) to give her an entitlement of 1.87 weeks of holiday three times per year.

Mrs Brazel worked 127 hours in the Spring term. Because that was only a 10-week period, the school added the last two weeks Ms Brazel worked from the Autumn term. This gave an average of 149.5 hours. The next step was to multiply that number of hours by Mrs Brazel’s hourly rate of pay, resulting in a figure of £4,410.25. This was divided by 12, giving £367.52 per week of annual leave. So, using the calendar week method, she would receive £687.26 for the 1.87 weeks’ notional leave.

Another method is the percentage method (referred to as the 12.07% technique). This isn’t set out in the Working Time Regulations, but it is widely used by employers. Under this method the school would calculate the number of hours she actually worked in the Spring term (127) and multiply that by 12.07%. This calculation comes from taking the 52 weeks in a year, subtracting the statutory 5.6 weeks to give 46.4 actual working weeks and dividing that by 52.

Under this method, Mrs Brazel would have been entitled to £452.20, taking the number of hours worked (127 hours), dividing that by 12.07% to give 15.33 hours, then multiplying that by her hourly rate of pay £29.50.

Method used in this case

After September, the school changed their method of pay from the calendar week method to the 12.07% method as they felt that it was fairer. They thought that her annual pay should be pro-rated to be consistent with the hours she worked, which is called the ‘conformity principle’, a principle that has the seal of approval from EU law.

Unsatisfied with the figure, Mrs Brazel complained to the Employment Tribunal about unlawful deductions. She claimed she was entitled to pay calculated by the calendar week method. She lost and the case was appealed through the Employment Appeals Tribunal, the Court of Appeal and finally the Supreme Court (formally the House of Lords).

She won at the Employment Appeals Tribunal, which said that there was no justification for departing from the principle set out in the Working Time Regulations and that the calendar week method does comply with EU law.

She also won at the Court of Appeal which recognised that the calendar week method put her in a more favourable position than some full-time colleagues but they said that that was not sufficient reason to justify departing from the statutory scheme in the Working Time Regulations.

How should employers calculate annual leave for term-time teachers?

As this article hopefully shows, the main question was whether employers in the education sector should calculate annual leave for term-time teachers

• the same as full-time workers by taking into account the number of weeks not worked, or
• by disregarding weeks not worked.

She won (again) at the Supreme Court, which held that the calendar week method should be used, not the 12.07% method. Although both parties agreed that this method would put the teacher in a more favourable position in terms of pay, the Supreme Court agreed with the Court of Appeal that this was not a sufficient reason to ignore the Working Time Regulations.

Therefore Mrs Brazel’s annual leave pay should not be pro-rated (changed).

What does this mean for calculating annual leave for term-time teachers?

This case highlights the courts’ general preference towards the calendar method of pay for part-year employees.

It also shows that these employees can no longer take longer periods of annual leave with the confidence that they will be paid for their time off.

More positively, part-year workers who feel they have suffered from unlawful pay deductions, could succeed in their claims to the Employment Tribunal if their employer used the 12.07% method of calculating pay.

Case report: Harpur Trust v Brazel

Image used under CC courtesy of Caitlin Regan