Holiday pay guidance reviewed amid fears colleges could be left out of pocket

The government is reviewing guidance on holiday pay for term-time-only workers after law firms warned a mistake could leave colleges out of pocket.

The non-statutory advice, which comes into effect in April, follows a court ruling in 2022 which means holiday pay for term-time-only workers must be calculated based on the hours they work in a normal week, not pro-rated based on the weeks worked in a year.

An employment appeal tribunal ruled in 2018 that Bedford Girls School music teacher Lesley Brazel was underpaid because of the way her holiday pay was calculated.

Four years later, the Supreme Court quashed an appeal by the school’s parent charity, the Harper Trust.

Previously, Brazel’s holiday pay was based on what she would earn in an average week, multiplied by 5.6, the statutory number of weeks of leave in England.

But the trust changed its approach to pay in 2011, calculating the total number of hours she worked each term, and paid per for 12.07 per cent of that figure.

Confusion over ‘part-year workers’ definition

Government guidance, published in January, focuses on two types of worker affected by the change. Irregular hours workers are those whose paid hours are “wholly or mostly variable”.

Part-year workers, according to the guidance, are those for whom there are periods of at least a week “which they are not required to work and for which they are not paid”.

It gives an example of a worker who is paid “an annualised (flat) salary over 12 months but has periods of time that last more than one week where he is not working”.

He “would not qualify as part-year worker if his contract reflects that there are weeks where he is not working and there are no weeks where he does not receive pay”.

It is this section of the guidance that has caused confusion, law firms said, because it appears to suggest term-time only workers who are paid in 12 instalments throughout the year do not count as part-year workers.

In guidance published on its website, Browne Jacobson said: “Put simply, we think the non-statutory guidance has got this wrong.” 

Colleges could end up paying more

Sarah Linden, senior associate at Browne Jacobson, told FE Week the confusion “could result in education employers providing, and paying, term-time-only [workers] for more statutory holiday than they otherwise need”.

“The non-statutory guidance suggests employers must continue to provide these workers with 5.6 weeks of statutory holiday, rather than being able to make use of the new statutory holiday entitlement calculation that would otherwise effectively pro-rate these workers’ entitlement based on the amount they work.”

But she added that “in practice, it’s a technical issue” and “likely to be of limited impact” for employers that follow the National Joint Council process for support staff pay and conditions.

“This is because TTOs are entitled to a pro-rated share of the full-time contractual holiday entitlement set out in the green book proportionate to their working time.”

The firm said it recommended schools and colleges “consider amending their TTO contracts to make the position clear”.

Government reviewing guidance

Approached with the concerns, a Department for Business and Trade spokesperson said they were “currently reviewing the guidance and will provide an update in due course”.

“Whilst the legislation defining a part-year worker applies to all sectors, we recognise this has a unique impact on those working in education.

Guidance issued by Stone King, another law firm that specialises in education, states that “unhelpfully, [the guidance] gives an example which could be interpreted to indicate that because term-time-only staff are paid in 12-monthly instalments, they would not be considered part-year workers”.

They said the guidance was “wrong”, and that changes to the law “take primacy over the non-statutory guidance”.

They said they were “in contact with the Department for Business and Trade to seek a revision and clarification to the non-statutory guidance”.

But they added that while the guidance left a “small amount of doubt as to calculations for TTO staff… we do not think this should necessitate any action from schools or colleges”.

Term-time-only workers are “likely to fall within the definition of a part-year worker as they tend to have periods of at least a week which they are not required to work and for which they are not paid”.