Zero hour contracts and holiday pay
In a recent case the Court of Appeal has heard an appeal regarding the correct calculation of holiday pay for a worker who only worked during the school term time which was in dispute. The worker in question was a music teacher who worked variable hours and who was employed on a zero-hours contract of employment. The school had calculated her holiday pay at a rate equivalent to 12.07% of the hours she worked in each term. The Court disagreed with this form of pro rating. Instead, it held her holiday pay should be calculated by averaging her normal rate of pay over the twelve weeks prior to holiday being taken – with any week not worked being ignored and replaced by the last working week before that.
It is understood that teachers with variable hours contracts are pretty uncommon; most teachers on permanent contracts have an annual salary and this ruling does not affect them. In a wider context though, this could affect workers on permanent zero-hours contracts working irregular hours across other sectors. In relation to the reference period, from 6 April 2020, this increases to 52 weeks where a worker has variable remuneration, either because the worker does not have normal working hours or they have normal working hours but the remuneration varies with the amount of work done/time the work is done.
For more information on how much this could cost your business and to obtain our commercial views on how you can approach this, please contact our Legal Team on 0161 478 3800.