Harpur Trust v Brazel [2022] UKSC 21

In this article Prisha Budhrani examines the implications of Harper Trust v Brazel on leave entitlement for part time workers.

Background

This appeal considers a pivotal issue concerning the leave entitlement calculation of part-time workers, described as workers whose schedule is “irregular.” These workers have a continuing contract but do not work the requisite number of weeks as regular part-time workers nor the requisite hours by full-time workers. The appellant, Harpur Trust, manages Bedford Girls School, where the respondent, Mrs Brazel, teaches music lessons in the form of this “irregular” schedule and is paid by explicit teaching hours. In the school term, the respondent takes up various hours per week in line with how many students require lessons. She teaches ten to fifteen hours each week with no minimum hours and does not teach during term breaks. She is entitled to £29.50 per hour and is paid at the end of each month. The appellant recognised the respondent as a “worker” under the Working Time Regulations (“WTR”), suggesting that she is entitled to 5.6 weeks of paid annual leave, which takes place during the term holidays (which she takes in three tranches, each being 1.87 weeks) per their employment contract in clause 27. The matter in question is of statutory interpretation and payment calculation, whether the leave entitlement of these “special” workers should be calculated pro rata on the same principles as full-time workers, meaning their entitlement does not decrease on the weeks they do not work, or it should be calculated ignoring those weeks, which allows an entitlement which surpasses other workers. 

Leading up to the Supreme Court decision, the dispute arose during the employment contract dated 11 April 2011, where she alleged unauthorised deductions from her underpayment of holiday remuneration between 1 January 2011 and June 2016. Harpur Trust pro-rated her holiday pay to the actual time she works. Brazel brought this claim to the Employment Tribunal under Part II of the Employment Rights Act 1996 (“ERA”). Subsequently, the Employment Tribunal dismissed her claim, accepting that her holiday remuneration should be proportional to demonstrating that she only worked during the school term. The Employment Appeal Tribunal (HHJ Barklem) accepted Brazel’s appeal that she is entitled to the statutory annual leave for 5.6 weeks per the statute. There was no justification for Harpur Trust to depart from this rule by pro-rating her remuneration. In the Court of Appeal, Underhill, Hamblen, and Moylan LJJ dismissed Harpur Trust’s appeal although their calculation was considered proportionate, the statutory scheme should not be departed from even though it put Brazel in an advantageous position compared to full-time workers. The Justices in the Supreme Court, namely Rose, Arden, Hodge, Briggs and Burrows, came to a unanimous decision dismissing Harpur Trust’s appeal and determined the precise computation of annual leave and holiday pay for these “special workers.” 

The legislative framework and principles

As mentioned, this appeal’s main issue is the statutory interpretation and calculation of the holiday pay. The statutory leave specification preceding UK’s departure from the EU was governed under the Working Time Directive (“WTD”). In addition, the WTD was administered in the UK through the WTR, which contains an obligation to implement it. Article 153 of the Treaty on the Functioning of the EU lead to the adoption of the WTD, which authorises the EU Council to set minimum standards on working conditions for member states to implement progressively. The UK law bestowed a further 1.6 weeks in the WTR as of 2007 rather than the four weeks entitled under the WTD. The WTR, including the relevant domestic EU case law, is considered as retained EU law which applies to the effect of the law as mentioned in section 2(2), section 6(7) and section 6(3) of the European Union (Withdrawal) Act 2018. The appellant argues that provisions stipulate that the computation of holiday entitlement should comply with the conformity principle, meaning the compensation should mirror the respondent’s amount of work. This principle is entrenched in the case law of the Court of Justice of the European Union through the interpretation of the WTD.  

As Brazel took her annual leave in three tranches, with one tranche being 1.87 weeks, the appellant computed her holiday entitlement in the period prior to September 2011 in accordance with section 224 of the ERA required by Regulation 16 of the WTR. In accordance with the provision, the appellant calculated how much the respondent was paid on average for the 12 weeks during the term, divided the amount by 12 and provided her with the entitlement of 1.87 times the weekly average. After September 2011, the appellant revised their calculation when Brazel took her holiday pay in three tranches per the percentage method. Harpur Trust took Brazel’s total hours worked at the end of each term, taking 12.07% of the amount and paid her the hourly rate. Acas suggested this computation method to pay “casual workers.” The guideline was later revised, and the BEIS provided a procedure in 2020 handling holiday entitlement for “irregular workers” such as Brazel and confirmed that the percentage method should not be utilised. Brazel avers her entitlement should be calculated in conjunction with the calendar week method employed before September 2011. The difference between these two methods is that the percentage method for holiday pay conforms with precisely what the respondent has worked, whilst the calendar week method confers a higher percentage of the total payments received in a year compared to full-time workers. Another method that Harpur Trust has raised is the worked year method, which only considers the weeks the worker works, ignores all term breaks, calculates it pro rata and complies with section 224 of the ERA. 

Judgment 

The Supreme Court examined Harpur’s Trust’s contention that all worker’s holiday entitlement must be pro-rated under EU Law, relying on QH v Varhoven kasatsionen sad na Republika Bulgaria (C-762/18) [2020], which demonstrates the conformity principle. In addition, the appellant submits this principle mirrors “pro rata temporis,” which is a concept engrained in UK and EU law (The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000). Pro rata temporis is applicable when it is appropriate that part-time workers should be treated less favourably than full-time workers. The Court cited the cases of QH and Dominguez (C-282/10) [2012] to note the exceptions of the conformity principle in the situation of sickness. The appellant’s argument notes the absurdity of the WTR to allow irregular workers to be entitled to holiday pay which is disproportionate to the entitlement of full-time workers. The Court maintains that it is not enough for the appellant to demonstrate that the irregular worker receives disproportionally more than other workers. Furthermore, the Court holds that the regulations under the WTR are inconsistent with the conformity principle as there is no distinguishment between any worker, and it should be applied consistently. 

The percentage and worked year methods are vastly contrasting from the WTR. For instance, the percentage method excludes the calculation of a week’s pay despite the WTR requiring it, and the worker year method treats a week as different from a calendar week. Moreover, these methods’ calculations become over-complicated when a worker works irregular hours per week in a year. This would impose financial, administrative and legal limitations referred to by the WTD, requiring workers’ employers to keep comprehensive records. On the assertion that these irregular workers receive a higher percentage of holiday entitlement of their annual pay in juxtaposition with other workers, the Court recognises that this “slight favouring” does not justify the revision of the current statutory scheme and the current construction accords with the WTD. The conclusion of the Supreme Court reinforces the Court of Appeal’s decision that the calendar week method is the accurate computation of holiday entitlement, taking into account the WTR and EU Law.  

Commentary

This decision is noteworthy to employers who have consistently utilised the percentage method as it is conventional practice for these workers. In order to avoid “irregular workers‘ ‘ such as Brazel bringing a claim for unauthorized deductions from her underpayment of holiday remuneration, employers are advised to provide repayments as a result of their pro-ration.