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  • Shepherd Partnership

A Supreme Court ruling has changed holiday pay calculations for some workers

In the UK all workers are entitled to 5.6 weeks of annual paid holiday each year. A case was recently heard in the Supreme Court which has clarified how this applies to an employee who do not work throughout the whole year or who has a zero-hours contract.

The court’s decision was that those workers who work only certain weeks of the year should have their holiday pay calculated based only on their earnings during the weeks worked. The result of this is that the widely used method of taking 12.07% of employees’ pay (being 5.6/46.4 weeks) is no longer lawful.

Employers of continuously employed part-year staff, including seasonal, term time and zero-hours workers, need to review their holiday pay arrangements promptly to ensure compliance. This might mean employment contracts need to be reviewed in addition to checking holiday pay calculations are correct.

To minimise the risk of employees claiming for backdated holiday we would recommend amending contracts and pay calculations quickly as there may also be a risk of a claim for back payment of holidays that are linked without a 3 month break.

If you have affected employees, you should take advice from a human resources specialist. We can put you in touch with Sarah Seastron, a fully qualified Human Resource practitioner who has been advising us and our clients for many years.

Please speak to our director, Heather, on 01756 799823 and she will give you her contact details.

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