Calculating holiday pay for workers with ‘irregular’ hours

The Working Time Regulations 1998 (WTR’s) state that workers are entitled to a minimum of 5.6 weeks’ leave per year with part-time workers being entitled to a pro-rated amount of this figure. For example, an employee working full time would be entitled to 28 days per year (5 days x 5.6 = 28) whereas a part-time employee working say 3 days per week, would be entitled to 16.8 days per year (3 days x 5.6 = 16.8 days).

The above is clearly a straightforward calculation, however the situation becomes more complicated for workers who do not have ‘normal working hours’. Under the Employment Rights Act 1996 (ERA) if an employee works irregular hours, their holiday pay should be calculated using an average of their pay over the last 12 weeks. On the basis that the 5.6 weeks leave entitlement amounts to 12.07% of a worker’s hours (12.07% reached by dividing 5.6 by 46.4 (total number of weeks in a year less 5.6 weeks holiday), employers have generally calculated holiday pay as 12.07% of pay for each hour worked (i.e. the assumption was that the calculation for both the amount of holidays and holiday pay, would be the same). The recent case of The Harpur Trust v Brazel however, shows that the same approach does not work for both…

New workplace reforms announced – take note of the requirements

At long last the Government has announced its response to the Matthew Taylor report on modern working practices, published in July 2017. Mr Taylor is a former aide to Tony Blair and is currently the chief executive of the Royal Society of Arts. He was charged by the previous Conservative government with reviewing employment law practices, with a particular emphasis on the emergence of the “gig economy”, characterised by zero hours contracts. The Government’s response and recommendations in the “Good Work Plan“, a 62 page detailed response which, commendably, lists all 53 recommendations in the Taylor Report and provides itemised responses

According to the BBC, significant changes will take effect from Monday 24 December, including an entitlement to a written statement for all workers (not just employees) of terms and conditions from the first day of a person commencing work (currently within two months). However, I am not sure that this is correct since secondary legislation will be required and, given the Government’s busy schedule, I can’t see it being fitted in in the near future. However, it makes sense to prepare for the changes and change procedures, where necessary to do so, as soon as possible.

It is no surprise that zero hours contracts have not been banned. When being interviewed on BBC Radio 4 earlier this week Mr Taylor cited the example of the trial run by McDonalds (referred to in my earlier blog posts on the topic) in which employees were offered the choice of fixed hours or zero hours contracts. Only 20% took the fixed hours option, thereby demonstrating that zero hours contracts do work for some people.

Among other notable accepted proposals, as matters stand, a break in service of one week does not affect the calculation of the qualifying period for continuous service. In future, breaks of up to four weeks will be disregarded.

Additional information in the form of a Key Facts Page will be provided to all agency workers at the start of each contract, setting out their contractual and employment rights, so that they are clearly understood from the outset.

Significantly, written statements of terms of employment (to be issued to both employees and workers from day one). Additional information required to be provided includes:

is a zero hours contract one of employment or self-employment?

News about zero hours contracts continues unabated. After I reported last month that the Chartered Institute of Personnel and Development had conducted research suggesting that many people are happy with zero hours contracts, Vince Cable has performed the sort of volte face that seems to come easily to politicians by announcing that the crackdown on…