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A Supreme Court decision has held it is not lawful for businesses to calculate workers’ paid holiday entitlement using 12.07% of hours actually worked.
A music teacher was engaged on a zero-hours contract to work different hours each week during term times. Under the Working Time Regulations, she’s entitled to 5.6 week’s paid holiday each year. Her employer calculated her holiday pay entitlement using 12.07% of hours. The teacher argued in doing so she was being put at a detriment.
The Supreme Court agreed. 5.6 weeks’ entitlement should be paid based on the average hours over the previous 52 weeks worked.
Back-pay – if you’ve previously used the 12.07% method, it’s possible to minimise the potential for claims of unlawful deductions from pay by immediately starting to pay workers’ holiday entitlement as set out above. This stops the ‘claims clock’ at that point, with the time limit for litigation running out three months after.
Communication – if you’re changing your approach, think about how you’ll communicate the change. Tying it in with new contracts and introducing additional benefits can help minimise questions or possible challenge.
Always take advice if you’re unsure how this decision might affect you or you need support with your approach moving forwards – get in touch to discuss with us.
This update is accurate on the date it was sent (21 July 2022), but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.