How The Latest Supreme Court Ruling Affects Term-Time Only And Zero-Hours Contracts

Updated 13 December 2023

The government has published its response to consultations on:

• calculating holiday entitlement for part-year and irregular-hours workers following the Supreme Court’s decision in the Harpur Trust v Brazel case (as outlined in the original blog post below…)
• reforms to retained EU employment law – which proposed changes to annual leave, holiday pay and the record-keeping requirements of the Working Time Regulations 1998
• the requirement for employers to consult with workers under TUPE, the Transfer of Undertakings (Protection of Employment) Regulations 2006.

The government intends to:

• Introduce ‘rolled up’ holiday pay for irregular hours and part-time workers – based on 12.07% of hours worked in a pay period.
• Press ahead with TUPE consultation changes. Employers (with fewer than 50 employees) undertaking a transfer of any size – and employers of any size undertaking a transfer of fewer than 10 employees – will be able to consult their workers directly if there are no worker representatives in place.
• Press ahead with the planned clarification of working time record-keeping requirements. Employers will still need to keep adequate working time records, as required by the current legislation.
• Legislate to restate EU case law for carrying over annual leave when workers have been on maternity leave, family-related leave or sick leave.

Term-Time Only And Zero Hours Contracts

Workers on term-time only and zero-hours contracts now have added protection against prorating of annual leave and deductions from their wages. It follows a recent decision by the Supreme Court.The case of Harpur Trust vs Brazel brings important clarity to a complex area of employment law. But some questions remain…and there are still possible pitfalls.

Harpur Trust vs Brazel

The case centres on Mrs Brazel, a visiting music teacher at Bedford Girls School, which is run by the Harpur Trust. As a worker, she is entitled to 5.6 ‘weeks’ of paid annual leave per year. She would take that leave during the school holidays.

But the Harpur Trust argued that this leave should be prorated, based on the number of weeks that Mrs Brazel actually worked. The trust had consulted the Acas guidance booklet on the matter and made deductions from the teacher’s wages – resulting in a long-running legal row:

• An employment tribunal found in favour of the trust – but Mrs Brazel appealed the finding.
• The Employment Appeal Tribunal reversed the decision, finding in favour of Mrs Brazel. The tribunal decided that prorating was not appropriate – and pointed to wording in the Working Time Regulations 1998.
• The case then went to the Court of Appeal – which upheld the decision in Mrs Brazel’s favour. So the trust appealed.
• Now the Supreme Court – the UK’s highest – has upheld the Court of Appeal’s decision, dismissing the trust’s appeal.

And that is that as far as this particular point of law is concerned. The Supreme Court’s decision is final. No more appeals. No European Court of Justice now that Britain is out of the EU.

What The Supreme Court’s Ruling Means For You

In short, this is what the verdict means…

A part-time worker on a permanent contract cannot have their leave prorated to that of a full-time worker. It is not required under either EU or domestic law.

Why The Supreme Court Ruled The Way It Did

The Supreme Court quotes four reasons for its decision:

1. EU case law suggests that – in general – the minimum entitlements in the Working Time Directive (WTD) are calculated with reference to the work carried out. But the directive does not prevent a more generous provision under domestic law.
2. Even if the Working Time Regulations resulted in Mrs Brazel being entitled to more leave than she might be strictly entitled to under the WTD (and proportionately more time than full-time workers), this would still comply with the WTD.
3. The WTR’s means of calculating an average week’s pay was a policy choice made by Parliament. It took into account people who worked irregular hours. Parliament made that choice knowing it would affect weekly pay for some people but not others.
4. There is nothing in the Working Time Regulations to suggest they permit the alternative methods of calculating pay used (or proposed) by the Harpur Trust. Aspects of the trust’s proposed methods were “directly contrary to what is required by statutory wording and the WTR,” said the court.

What Should Employers Do?

Tread carefully – because although the Supreme Court’s decision is clear and final, there are still potential pitfalls.

There remains the question of when a term-time only worker can take their 5.6 weeks of holiday. Must it be in the main school holidays? Or can workers take time off during any school holidays, including half-term breaks?

This could have important ramifications for workers claiming back-pay where there is a series of deductions made at intervals of longer than three months.

There is also the issue of workers who have a series of short-term contracts with the same employer over a year. Are they entitled to 5.6 weeks of leave annually…or does the entitlement reset with every fresh contract? And what about part-time workers who work irregular hours and want to take time off?

Each worker/employee’s unusual set of circumstances could result in further litigation. So it pays to be cautious and seek expert legal advice.

What Should Workers And Employees Do?

Workers and employees on term-time only and zero-hours contracts can take heart from the Supreme Court’s ruling. It sends a clear signal to employers trying to prorate annual leave and deduct money from wages.

But don’t act without first taking legal advice. Employment law can be confusing and fast-changing with each successive tribunal decision or appeal ruling on other similar sets of circumstances.

Further Reading

• Employment Settlement Agreements And the Potential Pitfalls. Read more…
• Should I Accept A Settlement Agreement? Read more…
• Menopause In The Workplace. Read more…
• Are You Suffering Discrimination Due To Your Sexual Orientation Or Gender Reassignment? Read more…

Get Expert Legal Advice On Employment Law

Contact Coles Miller employment law solicitor Hugh Reid for expert advice on the Working Time Regulations, employment tribunals and other related legal matters. He is based at our Poole office.