Employment tribunal and court judgments | September 2022

Supreme Court confirmation that 12.07% holiday pay is not allowed

In July the Supreme Court finally handed down its judgment in Harpur Trust v Brazel [2022] UKSC 21 where it confirmed that part-year workers (like term-time workers or those working on a zero hours contract), who work only in certain weeks of the year but have a contract which covers the entire year, should not have their holiday entitlement pro-rated.

Ms Brazel was a music teacher on a zero hour permanent contract with the Harper Trust. She worked as and when she was needed, mostly during school term and on very part time hours. When Harper Trust changed its calculation of Ms Brazel's holiday pay to use the 12.07% method, Ms Brazel brought a claim to the Employment Tribunal asserting the method was inconsistent with the Working Time Regulations 1998. The 12.07% method was recommended by ACAS to calculate the total annual value of holiday pay for casual workers – it is the statutory minimum period of holidays in a year (5.6 weeks) expressed as a percentage of the number of working weeks in a year (46.4 weeks).

The Tribunal dismissed the claim, but the Employment Appeal Tribunal and Court of Appeal upheld it. Ultimately so did the Supreme Court – who ruled that workers like Ms Brazel are entitled to the same 5.6 weeks of holiday as workers who work full-time throughout the year. Their entitlement should not be pro-rated via the 12.07% method. The calculation for a weeks' pay involves, inter alia, looking at average earnings over the previous 52 weeks – for Ms Brazel, her holiday pay should have therefore been the 17.5% she had claimed (and not the 12.07% paid by Harpur Trust).

See our article analysing the case and its implications here.

Employers should check the wording of the contracts it has with staff, especially those who are engaged to work flexibly or not for the entire year to see what is said in relation to holiday entitlement.  You should also understand what arrangements are currently in place for the payment of holiday pay before considering whether there needs to be any changes to your current practices.  This is a really challenging area which could give rise to Employment Tribunal claims.  If you think you may be impacted by this decision, please do contact your usual Foot Anstey contact. 

Mental health and extension of time

In August, the Employment Appeal Tribunal ("EAT") granted an extension of time to an employer to lodge its Response to an Employment Tribunal claim on the basis of its CEO's mental health.

In MTN1 Ltd v O'Daly, the Claimant brought a claim against MTN 1 Ltd, its employer ("the Respondent"), for unfair dismissal.  The Respondent did not provide a Response as it was required to do by the 5 March 2020 deadline and a default Judgment was entered against them.  The Respondent had until 4pm on 8 June 2020 to appeal the default Judgement but it entered an appeal one day after the deadline.

The Respondent applied for an extension of time based on its CEO's mental health impairments of ADHD and depression. The EAT, applying the guidance established in J v K [2019] ICR 815, held that the impact of the CEO's ADHD and depression was "a material and substantial part of the explanation for why the appeal was instituted late", and that an extension of time should be granted.