REC backs plan to rectify holiday pay unfairness to help workers and companies

The Recruitment & Employment Confederation (REC) has backed plans to lessen the unfairness and uncertainty in holiday pay rules after a binding law court judgment.

The Harpur Trust v Brazel (“Harpur Trust”) outcome created uncertainty about whether employers of workers with irregular hours could continue to pro rata holiday leave entitlement as 12.07% of hours worked in the relevant pay period. The Harpur Trust decision said that it was unlawful to pro rata the holiday leave entitlement of part year workers and that they were entitled to the legal minimum for full time workers of 5.6 weeks (no matter how much time was spent working). This decision resulted in part time workers possibly being entitled to less holiday leave than part year employees despite having worked more hours than them. The uncertainty created by Harpur Trust affects hundreds of thousands of part-time and irregular hours workers.

In 2022 REC called for the government to consult on the fallout – not least because the ruling means part-year workers are entitled to a larger annual paid holiday entitlement than part-time workers who work the same number of hours across the year but work fewer hours each week consistently across the year. The ruling has caused anxiety and confusion among employers, workers, business representative groups..

In a submission to the government, the REC backs the Department for Business and Trade move to put the 12.07% holiday pay calculation method into legislation. REC believes the 12.07% method should apply to all workers (as defined in the Working Time Regulations 1998) whose working patterns mean that there is no simple way to accurately calculate their holiday entitlement.

Lorraine Laryea, REC spokesperson, said:

“Our approach for all workers with irregular working hours will bring clarity for workers and businesses and ensure all workers receive holiday leave and pay that reflects their time at work. Agency workers who have complex contractual arrangements need a consistent and simplified method of calculating holiday pay and holiday leave entitlement. The government should make their suggested change retrospective to avoid accidental non-compliance.”

Lorraine Laryea added:

“We urge the government to go further and address the issues of Harpur Trust v Brazel as only one piece of the puzzle within a more comprehensive review of the Working Time Regulations. The government now has an unparalleled opportunity to fix problems with working time legislation more generally via the Retained EU Law (Revocation and Reform) Bill. We need modern legislation that reflects the rise of the gig economy and temporary working in general.

“It is outrageous that we don’t have working time provisions which are in keeping with the modern ways of work, which should provide a simple structure that employers and workers understand. This will ensure that workers receive their rights and employers are not unfairly penalised for inadvertently falling foul of outdated provisions.”

Ends

Notes to editors:

In our submission to government, the REC recommends:

A fixed 52-week reference period for workers engaged for 52 weeks or more and an application of the 12.07% method on the hours worked in those 52 weeks; and

A duration of engagement reference period for all workers engaged for less than 52 weeks in the respective leave year and an application of the 12.07% method on the hours worked during that period.

The following holiday pay reference periods for all part year and irregular hours workers

A fixed 52-week reference period of the preceding 52 weeks before the leave calculation for workers engaged for 52 weeks or more; and.

A duration of engagement reference period for the working weeks preceding the leave calculation of leave for workers engaged for under 52 weeks in the respective leave year.

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