Following the recent Supreme Court judgment in Harpur Trust v Brazelthe Government has initiated a consultation on the calculation of holiday entitlement for part-year and irregular hours workers.

In Harpur Trust v Brazel, the Supreme Court held that the correct interpretation of the Working Time Regulations 1998 (WTR) is that holiday entitlement for part-year workers should not be pro-rated so that it is proportionate to the amount of work actually performed each year. Instead, the Court held that part-year workers on permanent contracts should receive 5.6 weeks of annual leave and that their holiday entitlement should be calculated using a 52-week holiday entitlement reference period. The judgment noted that in calculating entitlement, the WTR adopts a “time-apportionment basis, not an apportionment on the basis of work actually done”, as reflected in the arrangements for apportioning entitlement for workers joining part way through a leave year.

As a consequence, part-year workers may receive a windfall - they are entitled to a larger annual paid holiday entitlement than part-time workers who work the same total number of hours across the year but work fewer hours each week consistently across the year. An illustration of how this disparity may occur in practice can be found here.

In an attempt to address this disparity, the consultation proposes introducing a 52-week holiday entitlement reference period for part-year workers and workers with irregular hours, based on the proportion of time spent working over the previous 52-week period. This would bring the holiday pay and entitlement of part-year workers in line with the entitlements received by full-time workers and part-time workers who work the same number of hours across the year.

The consultation opened on 12 January and will close on 9 March 2023. Further details on the consultation, and details of how to respond, are available here.