The impact of Harpur Trust v Brazel on holiday pay for staff at football clubs

The facts in 60 seconds

Ms Brazel was employed by Bedford Girls School (run by the appellant, Harpur Trust) without a set number of working hours. She taught saxophone and clarinet to school children and therefore her working hours per week would depend on the number of lessons she was booked for. She worked roughly ten to 15 hours per week during term-time.

Outside term-time, Ms Brazel remained employed but the children weren’t in school and therefore she did not teach any lessons and was not paid. Instead, Ms Brazel was deemed to have taken annual leave during the school holidays.

To calculate Ms Brazel’s holiday and holiday pay each term, the school took 12.07% of the hours she worked over the preceding term and paid Ms Brazel her hourly rate of pay for those hours. While not technically the same (in that Ms Brazel was directed to take the time off during the school holidays, therefore ‘took’ holidays), this achieves the same result as including a 12.07% uplift on an individual’s hourly rate of pay – sometimes called ‘rolled-up holiday pay’ – a method that has been commonly used in the past by employers seeking to calculate holiday for workers working irregular hours. The percentage is the number of weeks’ statutory holiday in a year (5.6) as a percentage of number of working weeks in a year (52 – 5.6 = 46.4). This is the method Acas previously suggested employers may choose to use for casual workers (guidance it deleted in light of the Court of Appeal decision in this case).

Ms Brazel contended that this method incorrectly calculated her holiday pay to her detriment. She therefore brought a claim for unlawful deduction from wages. The Supreme Court rejected Harpur Trust’s appeal, finding in Ms Brazel’s favour.  The correct approach was (b) above: she was entitled to 5.6 weeks’ leave; weeks in which she did not work were to be discounted for the purpose of calculating her entitlement.

Holiday entitlement for the part-year, part-time worker

While the position is straightforward and uncontroversial for a ‘traditional’ part-time worker who has normal working hours each week and whose pay does not vary during those hours (a week’s pay for such a worker is the amount payable for their normal working hours in a week), Harpur Trust v Brazel concerned a term-time worker – someone who works during certain parts of the year and not others.

In a football club, this might include various roles, such as certain academy staff who only work during school terms, and stadium staff who perform no work during the close season. In addition, even where stadium staff are contracted for a fixed term for the duration of the season (so that they are not under contract during the close season), they may only work on home match days and therefore have a number of weeks during the season where they perform no work for the club at all.  This is particularly common with casual workers, who may choose to make themselves available for only certain shifts, at their convenience.

For such individuals, a week’s pay for the purposes of their holiday pay entitlement should be calculated by (broadly) looking back over the last 52 complete weeks in which remuneration was payable to the worker prior to the start of the holiday. If the worker did not work in any given week, that week is ignored and you must look a week further back until you get to 52 complete weeks in which the worker worked (although you don’t go further back than 104 weeks from the start of the holiday period). Where you do not have 52 weeks of data, you need to shorten the reference period to the amount of complete weeks of data you have (still ignoring weeks where no work is undertaken).

The effect, for Ms Brazel, was that the school holidays should have been completely ignored in calculating her holiday pay – resulting in her holiday entitlement being proportionately higher than that of workers who work full time or on a regular part time basis.

So what about the 12.07% method?

The Trust’s 12.07% method is not how the relevant legislative provisions are intended to operate. The Supreme Court went as far as saying it is ‘directly contrary’ to them (because it effectively ignores the provisions described above on calculating holiday pay for workers with no normal working hours).

Rolled-up holiday pay (simply paying an extra 12.07% on top of a worker’s hourly rate of pay for each hour worked) has a further flaw. A worker is entitled to 5.6 weeks’ paid leave per year. Rolled-up holiday pay gives workers a payment in lieu of taking days off. It is only legitimate to pay in lieu of holiday in the final year of someone’s employment, for any accrued but untaken leave. Rolled-up holiday pay also incentivises working as opposed to resting – if you take time off, you get paid nothing; if you work, you receive 12.07% on top of your hourly rate.

While it has been recognised for some time that the 12.07% method does not strictly comply with the Working Time Regulations, the Court’s total rejection of the method for workers whose working patterns do no neatly fit into the ‘5.6 weeks’ paid leave’ mould means employers should exercise even more caution before using the method.

What are our alternatives?

While the Court was quick to dismiss the 12.07% method, there’s no universal practical solution to deal with the issue. There are, however, a number of options to consider – which methods work for your club will depend on the nature of your contracts and workers.

For example, there is nothing wrong with dictating when an individual takes annual leave, be it during the close season, international breaks or weeks without a home match at the stadium (by either specifying this in contracts or serving the requisite notice on workers to take the leave). You would then use the method set out above to calculate a week’s pay and therefore their holiday pay for the relevant period of leave. For workers who want to take a different holiday to the one which the club has specified for them, you could allow them to take the day(s) unpaid and keep their paid holiday as the periods determined by the club.

The key difficulty, however, is determining how much leave an irregular-hours worker will be entitled to during a holiday year (unless you are specifying that all leave is to be taken in the close season and this ties in neatly with your holiday year). While it is clear that all workers are entitled to 5.6 weeks’ holiday per year, it is impossible to know exactly how much holiday an individual will accrue (i.e., what a ‘week’ equates to in days/shifts) over a holiday year, until it has ended and you can see how much they have worked.

This may leave clubs either owing workers further days’ holiday on the termination of their employment, or having paid them for too much leave, which the club will want to be able to recover. Contracts should therefore be reviewed to ensure that the club has the right to deal with overpayments.

You may also consider whether, particularly seasonal staff, need to be engaged during the off-season (although note this will not remove the problem entirely, but may reduce the complexity of the calculations and will also allow payments in lieu of holiday to be made on termination of the engagement at the end of the season).

For casual staff who have no obligation to accept work and instead put themselves forward for specific shifts or ‘assignments’, it may be possible to take the position that each assignment constitutes a separate engagement such that holiday entitlement can be paid in lieu on termination of that specific assignment (i.e., each shift).  Whether or not this method is compliant is uncertain and a review of the contract and nature of the relationship would be necessary.

Given the attention that Harpur Trust v Brazel has received, it seems likely that more workers will seek to challenge their holiday pay calculations, so it makes sense for clubs to satisfy themselves that their approach is compliant as soon as possible.

How we can help

Charlotte and Adam specialise in sports-employment matters and are part of the wider Walker Morris Sports Team. We are one of only a few firms in the UK to offer a complete sports law legal advice service. If you have queries on the calculation of holiday pay or arising from any of the points covered in this briefing, or require any advice or assistance on sports-employment matters, please contact Charlotte or Adam, who will be very happy to help.