What the Brazel case means for self-employed workers

The case highlights once again the urgent need for the rules surrounding holiday pay to be clarified.

What is Harpur Trust V Brazel?

Harpur Trust V Brazel involved Ms Brazel, a music teacher who works during term-time (part-year) and the Harpur Trust, a charity that manages a number of private schools in Bedford.

In this case, Ms Brazel believed that her holiday pay should be calculated using her average earnings over a 12-week period and not pro-rated. She argued that she lost out on annual leave after the school she worked at changed the way it calculated her holiday pay in 2011. The Harpur Trust calculated her earnings at the end of each term, took 12.07% of that figure, and then paid Ms Brazel her hourly rate for that number of hours as holiday pay. That 12.07% is the proportion that 5.6 weeks of annual leave bears to the total working year of 46.4 weeks.

The Trust argued to the court that it could pro-rate her holiday entitlement and pay, to reflect the fact that she worked fewer weeks per year than comparable full-time staff.

While the Trust’s method of calculating part-time workers’ holiday pay is widely used and was recommended by HR bodies such as ACAS, Ms Brazel argued that the Harpur Trust weren’t compliant with Working Time Regulations 1998. The law states that part-year workers shouldn’t be entitled to less holiday pay than their full-year counterparts.

The verdict

Before the case went to the Supreme Court, it was heard by the Court of Appeal. The Court supported Ms Brazel and stated that workers on permanent part-year contacts must receive at least 5.6 weeks of holiday pay, on the basis that holiday could not be pro-rated because the Working Time Regulations 1998 do not include a pro-rata principle in these circumstances.

It was then taken to the Supreme Court. The Court agreed with the Court of Appeal and concluded that Brazel was treated unfairly for being a part-year worker.

So what does this mean for umbrella workers?

The Harpur Trust v Brazel ruling means that part-year workers are entitled to the same holiday pay as those working full-year. The verdict marks a turning point in how businesses - and in particular umbrella companies - calculate their holiday pay. It throws out the old 12.07% method.

Holiday pay has been at the centre of several disputes recently. The rules are relatively clear for full-time employees, but, as this case highlights, it becomes considerably murkier where people are working outside of this traditional employment structure.

There are long-standing concerns surrounding the treatment of holiday pay by umbrella companies. IPSE has called for this to be urgently addressed to ensure individuals receive their full entitlement in all circumstances. The Brazel case on its own will not solve these issues but it does shine a light on what is and isn’t considered ‘fair’. We hope that it will prompt regulators to issue comprehensive guidance on holiday pay, so that everyone, including umbrella workers, understands what their entitlement is, and gets it.