How should an employer calculate a term-time worker's paid holiday?

 

Currently, employers must ensure that term-time workers receive at least the statutory minimum entitlement of 5.6 weeks' paid annual leave a year (see below for changes that will affect some term-time workers from April 2024).

The employer can designate periods during the school holidays to be the term-time worker's annual leave and pay holiday pay in instalments over the year.

Where a term-time worker has regular hours during term time and their salary is paid in equal instalments over the year, to ensure that they are receiving the minimum statutory paid holiday, the employer can add 5.6 weeks on to the number of weeks the employee is contracted to work during the year, before averaging their pay out into equal instalments. For example, for an employee who is contracted to work 39 weeks a year, the pay that is averaged over the year must be based on at least 44.6 weeks of work.

For term-time workers without regular hours, the employer can still pay holiday pay in instalments over the year (for example, monthly or at the end of each term) ensuring that it amounts to at least 5.6 weeks' pay. In Harpur Trust v Brazel [2022] UKSC 21, the Supreme Court held that the holiday entitlement of term-time workers should not be pro rated to that of full-year workers. The calculation of a week's pay for term-time workers with irregular hours should be based on the average hours worked during the 52 weeks before the calculation date, not counting weeks in which no pay was due (s.224 of the Employment Rights Act 1996).

Term-time workers are currently entitled to 5.6 weeks' paid holiday, even if this works out more favourably than comparable full-time workers when calculated as a proportion of the actual number of days worked during the year.

The method for calculating holiday entitlement for some term-time workers will change for holiday years beginning on or after 1 April 2024.

For workers who meet the new definitions of either "irregular hours" or "part-year" workers, entitlement will accrue throughout the year, at the rate of 12.07% of hours worked in each pay period. Where the worker is contractually entitled to more than the statutory minimum holiday, holiday accrual should be calculated using a different percentage rate. This is calculated by expressing as a percentage the annual holiday entitlement divided by the number of working weeks in the year.

According to government guidance, term-time workers who are paid an annualised salary over 12 months will not meet the definition of "part-year workers". However, some term-time workers could meet the definition of "irregular hours workers". This applies where the number of paid hours that they will work in each pay period during the term of their contract in the leave year is, under the terms of their contract, wholly or mostly variable.