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

Employers must ensure that term-time workers receive at least their statutory minimum annual leave entitlement. The employer can designate periods during the school holidays to be the term-time worker's annual leave.

A worker's entitlement depends on whether or not they fall within the definition of either an "irregular hours" or "part-year worker" and when their holiday year began.

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, a Court or tribunal could interpret the legislation differently and reach a different conclusion. Some term-time workers could meet the definition of "irregular hours workers" or they could meet neither definition.

For workers who fall within the definition of irregular hours or part-year worker, where the holiday year begins on or after 1 April 2024: Entitlement accrues 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.

Employers can choose to pay rolled-up holiday pay for these workers.

For workers who do not fall within the definition of irregular hours or part-year worker, and/or where the holiday year began before 1 April 2024: Entitlement is to 5.6 weeks' paid holiday. This is the case even if the term-time worker's entitlement works out more favourably than for comparable full-time workers when calculated as a proportion of the actual number of days worked during the year.

Where the 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.

Where the term-time worker does not have regular hours (but does not fall within the irregular hours worker definition), 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. This decision still applies to term-time workers who do not fall within the definitions of irregular hours or part-year workers and to holiday years that began before 1 April 2024.

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). The calculation should take earlier paid weeks into account to bring the aggregate up to 52, but should not go further back than 104 weeks.