Consultation on Holiday Pay
CONSULTATION ON HOLIDAY PAY (12 January 2023)
The Government has launched a Consultation on ‘Calculating holiday entitlement for part-year and irregular hours workers.’
This is following on from the Supreme Court case of Harpur Trust v Brazel in July 2022 which held that permanent part year workers, i.e. workers who did not work a full year but who had permanent contract, are entitled to the full 5.6 weeks of holiday leave rather than a pro rata entitlement based on the amount of work they carried out.
The result of this judgement however meant that workers who work part year could receive a disproportionally high entitlement to annual leave, compared to the amount of time they worked. One scenario relied on by Harpur Trust in the case, was where a worker, on a permanent contract, who worked one week in the year, earning £1000, would be entitled to 5.6 weeks paid leave equating to £5600 holiday pay.
The Consultation proposes to introduce an entitlement reference period of 52 weeks to ensure pay and entitlement is directly proportionate to time spent working. This reference period would be a fixed period, where at the beginning of the holiday leave year the works entitlement would be calculated based on the previous 52 weeks.
The Government is also proposing that the weeks in which workers perform no work are included in the holiday pay reference period. This would cause that pay and entitlement reference periods to diverge slightly. Members will recall that for holiday pay calculation purposes, weeks where a worker does not complete any work are excluded. The Government believes including weeks where no work is completed would more closely align holiday entitlement with the work actually completed.
Whilst this will be very welcome by businesses it is important for business in Northern Ireland to remember:
“Any legislative changes because of this consultation would extend to workers in Great Britain. Employment law is reserved to Westminster for Scotland and Wales through the Employment Rights Act 1996. Employment law is devolved to Northern Ireland.”
However if the Executive was restored it could be one taken forward here.
The deadline for responding is 9 March 2023.