The recent Supreme Court decision in the case of Harpur Trust v Brazel [2022] UKSC 21 concerned the calculation of statutory holiday and pay, under the Working Time Regulations 1998, for a term-time only teacher.
The Employment Appeal Tribunal has handed down its decision in a case concerning the entitlement of a term-time only learning support assistant to receive the national minimum wage (NMW); and whether the pay calculation for NMW purposes should include hours falling outside the school term.
Lloyd v Elmhurst School Limited [2022] EAT 169
Facts of the case
The claimant, L, was employed as a part-time learning support assistant at a school. She worked three days a week during term-time and was paid her salary in equal monthly instalments. The contract did not state her hours of work, her salary or the rate of pay for school holidays. It stated that she was "entitled to the usual school holidays as holidays with pay".
L brought a claim for unlawful deductions from wages on the basis that her annual salary (£8,568) was below the applicable rate of the NMW for her hours of work.
It was accepted that L was employed, for the purpose of the NMW Regulations, in 'salaried hours work' in that she was paid an annual salary, in equal instalments, for a basic number of hours. The issue in question was what the basic number of hours was and whether it included hours during the school holidays.
She claimed that as a salaried hours worker, her basic hours should be calculated over a period of 52 weeks (including all the school holidays). The school maintained that her hours should be calculated over a period of 40 weeks, which was the total number of term-time weeks plus her statutory holiday entitlement. This was the period that HMRC had previously determined that employees at the school were paid in respect of, and had found no breach of NMW requirements.
The claim was dismissed by the employment tribunal, which held that L's basic hours for the purpose of calculating her NMW entitlement were 21 hours a week, over 40 weeks. It found that L only in fact worked during the school terms, meaning that the period during the school holidays did not count as working activity (other than her statutory holiday entitlement). This meant that her pay had not fallen below the rate required under the NMW Regulations.
EAT decision
The EAT upheld L's appeal. Under the NMW Regulations, her basic hours had to be calculated by reference to her employment contract. This should include certain hours that are not working hours because, for NMW purposes, certain absences for which a salaried hours worker is entitled to receive full pay (such as holiday or sickness) must be included in the basic hours.
The tribunal had been wrong to focus on the weeks (during term time) when L had actually worked; instead, it should have identified her basic hours from the terms of her employment contract, which specified that the holiday periods were "holidays with pay".
The EAT held that a salaried hours worker's basic hours for NMW purposes do not depend on the hours actually worked by the worker, but can include periods of absence for which contractual salary is due, even if the employer would not otherwise be expecting them to work during that period.
The EAT has remitted the case to another tribunal, to determine L's actual basic hours, in order to decide whether she had been paid in accordance with NMW rates.
The Birketts view
On first sight, this is a surprising decision from the EAT. It is common practice for term-time only workers to be paid in equal monthly instalments throughout the year, regardless of how many days of work were actually carried out during each pay period.
The EAT has emphasised the requirement under the NMW Regulations to calculate basic hours with reference to the contract, rather than considering the actual hours worked. The terms of L's contract were not clearly drafted in a number of important respects. It did not state her hours of work or salary, or that she was engaged on a term-time only contract. It also did not specify that she was entitled to take her statutory holiday entitlement during the school holidays. The term of her contract specifying that she had "holidays with pay" seems to have been the decisive factor in the EAT's decision.
To avoid a finding that a term-time only worker's basic hours should be calculated over a period of 52 weeks, running the risk that their pay will fall below the NMW level, the contract of employment should expressly state that school holidays do not form part of the individual's basic hours, save for their entitlement to statutory paid holiday.
In the education sector, for those employees whose basic hours would include school holidays (such as teachers) the contract should avoid any wording that could give rise to a contractual entitlement to the school holidays. The contract will instead usually refer to teaching time and non-teaching time, and confirm that the worker is only entitled to their statutory holiday, which will be deemed to be taken during the school holidays. This should avoid any assertion that the worker is entitled to accrued holiday, based on all the school holidays, that they have not been able to enjoy during any period of family related leave, or sickness absence.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
