Part time and casual staff holiday pay conundrum

There has been a rise in the number of claims at employment tribunal by part time workers claiming that they have not been correctly paid for holidays.

The formula used by many employers for calculating casual hours’ workers holiday entitlement is that they accrue holidays at a rate of 12.07% of hours worked.  This formula is based on 5.6 weeks’ holiday being 12.07% of 46.4 weeks, which is the 52-week year minus 5.6 weeks’ holiday entitlement.

Whilst this formula is not set out in law, it is a rule of thumb that makes the calculation of holiday entitlement simpler for those with irregular working patterns.

The legal minimum holiday to which all workers are entitled (whether full-time or part-time) are 5.6 weeks’ paid leave. For workers who work five days per week (i.e. full-time), this equates to 28 days’ paid leave each year.  For part-time workers who work set hours or days each week their holiday allowance is relatively straight-forward to calculate.  For example, a part-time worker who works three days a week is entitled to a minimum of 16.8 days’ annual leave per year. This is because one week for this employee is three days and not five. There is no requirement to round up entitlements to the nearest full day, although it is usually easier to do so for administrative purposes. However, employers cannot round the entitlement down to the nearest day.

Unfortunately, as stated above, the regulations that apply to holiday and part-time workers do not set out any precise formula for calculating holiday pay for part-time workers where they do not work fixed hours or days each week, or work during term-time only. This also presents difficulties for accurately calculating holiday entitlement for those who work part-time hours on an ad-hoc basis, such as those employed on zero hours’ or casual hours’ contracts.

Regulations for the protection of part-time workers state that they should not be treated less favourably than a full-time counterpart, unless the difference in treatment can be justified on the grounds that it has nothing to do with the worker’s part-time status. Any less favourable treatment could result in part-time workers pursuing a claim in the employment tribunal and it would be for the employer to justify the less favourable treatment to the tribunal.