If you have attended any of my DIB business gyms or read an earlier blog of mine, you will recall I have aired my frustrations surrounding the impact a Supreme Court ruling has had on many businesses.
It was the case of Harpur Trust v Brazel. The Supreme court’s ruling resulted in many businesses having to rip up the way in which they calculated leave for ‘atypical’ workers. The guidance provided by ACAS to utilise the ‘12.07%’ method to calculate leave was literally scrapped overnight. It has been a costly exercise for many and created a disparity under which ‘part year’ workers are entitled to often more generous holiday arrangements than those that work all year.
Thankfully, the Government have launched a consultation on proposed changes to the Working Time Regulations 1998 to address this. The consultation paper recognises that the Supreme Court’s interpretation of the regulations does not reflect the intention of the legislation.
What are the Government proposing?
Wait for it…… the Government are intending to endorse the ’12.07%’ method and allow employers to calculate holidays in hours (positive move as oppose the current ‘weeks’ method under the current legislation).
The essence of this proposal is to introduce legislation that “allows employers to pro-rate holiday entitlement for part-year workers so that they receive leave in proportion with the total annual hours they work“.
What will be different?
The 12.07% method will be used to calculate the following year’s holiday entitlement, rather than the current years. An Employer will use the current year’s holiday accrual as reference for the preceding holiday year.
How will this work in the first year of employment?
The paper proposes that in the first year of employment, holiday entitlement would accrue on a month-by-month basis as permitted under the current Working Time Regulations 1998. This means that at the end of each month in the first year of employment, the worker will have accrued 12.07% of hours worked in that previous month (on a cumulative basis throughout the year).
Final thoughts
I am 100% confident that my clients will be relieved at the proposed endorsement of the 12.07% method by the Government. Although, there will be a lot of frustrations, as this has taken unnecessary time and effort for those effected as a result of that dreaded Supreme court ruling! For an atypical worker it allows them to be able to plan, as they will be aware in year two of employment, what their holiday allowance will be for the year, rather than awaiting a month by month basis accrual.
There remain some questions that many of us have surrounding the practical implementation of this. We do not all employ people at the beginning of a holiday year, so I am currently unsure how we make the switch from monthly accrual to the year, if we are still only part way through a holiday year? Also, what happens if an employee works more hours and accrues holidays accordingly in 2023, but then works less in 2024, will they be given more holiday allowance then they have actually worked?……
I will keep you posted on developments.
If holiday calculations are causing you sleepless nights, then please contact my fantastic team for some advice contact@highperformanceconsultancy.com.