Calculating holiday entitlement for term-time workers: is there a simple answer?

Author: Darren Newman

Darren Newman

In light of new guidance for local government employers on term-time workers, consultant editor Darren Newman looks for a simple way to calculate the holiday entitlement of employees who work only during school terms.

Thinking through the holiday entitlement of term-time workers may at first glance seem straightforward. Term-time workers, by and large, receive their salary in twelve equal instalments. Typically, though, they are required to work for only 39 weeks in the year. It would be perfectly possible to employ someone on a salary and with a very generous 13-week holiday entitlement (which far exceeds the minimum set out in the Working Time Regulations 1998 (SI 1998/1833)). However, it is not as simple as that, particularly in the public sector.

The jobs taken by term-time workers are not conjured up out of nowhere; they have a place in the grading system and work alongside colleagues doing the same work as them. They have a notional full-time salary, which is reduced to reflect the fact that they work fewer weeks than full-time colleagues and is then averaged out over the year. When they receive their salary for August, therefore, that is not in respect of a month of paid leave, but a payment covering the work they did before the school holidays.

Essentially the difference is this. Paid annual leave is a period when the worker is permitted to be absent from work but continues to be paid as normal. If a period simply falls outside the individual's scheduled working pattern, that is not annual leave. We do not, for example, treat weekends as counting towards a typical worker's annual leave entitlement. Nor does a period outside term time necessarily count towards a term-time worker's holiday. To ensure that there is a proper period of paid annual leave it must be clear that although the worker is required to work for only 39 weeks a year, they are also paid in respect of a further period of annual leave.

How much leave should a term-time worker get? For local government workers, the Green Book (the national agreement on terms and conditions) has been updated to set out joint advice on this topic, agreed by both the employer side and the relevant trade unions. This advice goes into great detail in terms of pro rating the holiday entitlement of term-time workers in line with full-time workers and giving a formula for calculating holiday entitlement. The calculation is based on working out the rate at which annual leave accrues for full-time workers and applying the same formula to term-time workers.

I can't help but feel that this is more complicated than it needs to be. For me, the key to understanding paid annual leave under the Working Time Regulations 1998 is to think in terms of weeks rather than days. This is something that the Regulations are very clear about. The entitlement to paid annual leave is the one clear right in the Regulations that applies to all workers - there is no opt-out and there are no exceptions for special categories of worker. All workers are entitled to at least four weeks' annual leave plus 1.6 weeks' additional leave, and nothing in the Regulations allows this entitlement to be reduced. Even someone who works only one day a week is still entitled to 5.6 weeks' leave (in effect, they can take leave on that one day for 5.6 weeks).

Working out a daily accrual rate may assist the employer in ensuring that the term-time workers do not lose out in comparison with full-time colleagues; especially when it comes to contractual entitlements in excess of those required by the Working Time Regulations 1998. But any formula an employer uses to calculate entitlement must satisfy the basic test of resulting in at least 5.6 weeks' leave. So if the worker is contracted to work for 39 weeks, the pay that is averaged over the year must be based on at least 44.6 weeks of work. Ideally, as the Green Book suggests, the employer should clearly identify which weeks outside of term time will be treated as annual leave and which will simply be time when the worker is not required to work.

The problem with the Green Book formula is that for those employed on minimum Green Book terms (which give an entitlement to 31 days' leave) it results in a small shortfall for term-time workers. The Green Book points out that a full-time worker with an entitlement to 31 days' leave accrues annual leave at the rate of 0.135 days per day worked. Applying the same formula to a term-time worker working 195 days per year (39 weeks at five days per week) gives just 26.325 days of annual leave (195 x 0.135). That may be proportionate to the leave of the full-time worker, but since during term time the worker works five days a week, 5.6 weeks' leave would give an entitlement of 28 days.

The Green Book advice refers to the recent decision of the EAT in Brazel v Harpur Trust [2017] EAT 0102/17. That case concerned a casual term-time worker whose hours varied over the course of a term. The employer had applied an accrual rate in line with full-time workers to work out her entitlement to holiday pay, but this amounted to less than 5.6 weeks based on the average amount of time she worked during each term. The EAT held that her entitlement under the Working Time Regulations 1998 had to be respected even if that resulted in her receiving a proportionately greater holiday entitlement than a full-time worker. The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551) prevented the less favourable treatment of part-time workers, but did not prevent them from being treated more favourably.

The Green Book joint advice treats the Brazel case as though it may at some stage be overruled. I do not see how. There is no avoiding the fact that the Working Time Regulations 1998 give all workers an entitlement to 5.6 weeks' paid leave. No court could possibly hold otherwise. This inevitably means that a term-time worker must also be entitled to 5.6 weeks' leave. It follows that where a calculation based on a daily accrual rate falls short, as it seems to do for those on minimum Green Book terms, the employer needs to use periodical additional payments to make up the difference.