Harpur Trust v Brazel – where do we go from here?

This guidance note follows our summary of the Supreme Court’s judgment in the case of Harpur Trust v Brazel [2022] UKSC 21, which can be found here.

The Supreme Court’s decision is likely to have significant impact on employers who engage ‘part year’ employees, who, as a result of this decision, may now be entitled to greater annual leave entitlement and pay. It will have particular impact on education institutions who employ peripatetic music and other term-time teachers like Mrs Brazel, and organisations engaging permanent staff who only work for part of the year.

What is key to appreciate in the case of Harpur Trust v Brazel is the following:

• Mrs Brazel, a visiting music teacher, was employed by the Harpur Trust under an employment contract.
• Mrs Brazel was therefore an employee, employed on a permanent contract, but one with no guaranteed or fixed hours and whose hours of work would vary from week to week according to the demand for music teaching.
• Under her contract of employment she was entitled to 5.6 weeks’ holiday per year which she was required to take during the school holidays.
• Mrs Brazel was not required to undertake music teaching during the school holidays.
• Mrs Brazel was only paid at the end of each month for the hours she had worked in the preceding month. She would therefore receive no payment for any weeks during the school holidays when she was not teaching.
• The Court of Appeal coined the term ‘part-year’  to define Mrs Brazel’s contract, in that she worked neither a full year nor full weeks; she worked on a part time basis for part of the year, i.e. excluding school holidays – but she was employed throughout the year, including during the school holidays, when she was not required to work and was not paid.

The Supreme Court held that:

• Under the Working Time Regulations 1998, all workers are entitled to 5.6 weeks’ paid holiday per year. As Mrs Brazel was employed on a permanent basis, she was entitled to receive 5.6 weeks’ leave per annum.
• The Court rejected the method adopted by the school to calculate Mrs Brazel’s holiday pay, which was to pay her at her hourly rate in respect of 12.07% of the total hours she had worked in the preceding term.
• As she had no normal hours of work, a week’s holiday pay was required to be calculated in accordance with section 224 of the Employment Rights Act 1998 (ERA), but with the reference period extended from 12 to 52 weeks, with effect from 6 April 2020, (as amended by the Employment Rights (Employment Particulars and Paid Annual Leave Regulations 2018).
• Under section 224, any weeks in the reference period in respect of which an employee is employed but no remuneration is payable, are to be disregarded when calculating a week’s pay. 
• Mrs Brazel was therefore afforded a ‘part year’ employee windfall, in that she was entitled to the full 5.6 weeks’ holiday per annum to be calculated on an average of the hours she had worked in a 12 (now 52) week period, disregarding all weeks in which she was not paid.

Employers may wish to review the way they engage their casual employees/workers to take into account the more generous annual leave entitlement permanent part-year employees are entitled to. In order to avoid the preferential leave entitlements of part year employees, employers will need to review:

1. When and how variable hours/casual employees are paid. Mrs Brazel benefited from section 224 ERA, which disregarded, for purposes of calculating her holiday pay, all weeks she was employed but was not entitled to be paid. If her pay had been divided across 12 months, a week’s pay for her holiday pay purposes would have been based on an average of her earnings, including periods in which she was not required to work. This may require an agreed minimum number of hours to be paid each month, which would be increased by the number of additional hours worked. The important factor is that the employee is paid for each week they are employed.
2. Whether to place casual/variable hours’ staff on permanent employment contracts or use zero hour worker contracts. Ms Brazel was employed on a permanent contract, and was employed during periods in which she was not required to perform any teaching and during which she was not paid. Had she been engaged on a zero hour contract, and only engaged to perform specific teaching assignments, she would not have been employed in between those teaching assignments and the lack of mutuality of obligation may have meant she was not an employee at all. Her holiday entitlement would have fallen to have been calculated and paid at the end of each assignment. [NB. This option can be tricky for education institutions, where any gap in assignments may be deemed to be due to school holidays, and therefore a temporary cessation of work. ]

The Supreme Court’s decision will impact any employer that employs individuals throughout the year to work variable hours and who are only paid for the hours worked, such that there are periods of time when they receive no pay.

To discuss the implications of this judgment in more detail and the steps employers can take to address them, we will be running a webinar on the Supreme Court’s judgment in Harpur Trust v Brazel on 14 September 2022. Sign up for your free place here: https://register.gotowebinar.com/register/3418090704816203023