Mrs Brazel, a part-year visiting music teacher on a permanent contract, claimed her employer underpaid holiday pay by pro-rating her entitlement. The Supreme Court held that part-year workers are entitled to 5.6 weeks’ statutory paid leave without reduction for weeks not worked, rejecting the employer’s percentage-based calculation method.
Background
The respondent, Mrs Brazel, was a visiting music teacher employed by the appellant, the Harpur Trust, at Bedford Girls School. She taught saxophone and clarinet during term time only, working varying hours (usually between ten and 15 hours per week) with no guaranteed minimum hours. During school holidays she performed no work but remained under a continuing contract of employment. She was paid £29.50 per hour for hours actually taught.
Prior to September 2011, the Harpur Trust calculated Mrs Brazel’s holiday pay using the statutory method prescribed by regulation 16 of the Working Time Regulations 1998 (‘the WTR’), which incorporated section 224 of the Employment Rights Act 1996 (‘the 1996 Act’). This involved averaging her weekly remuneration over the preceding 12 working weeks, ignoring weeks in which no remuneration was payable (the ‘Calendar Week Method’).
From September 2011, the Trust changed its approach, instead calculating holiday pay as 12.07% of her total hours worked each term multiplied by her hourly rate (the ‘Percentage Method’). This was based on the proportion that 5.6 weeks’ annual leave bears to the 46.4-week working year. This method, recommended at the time by Acas guidance, produced significantly lower holiday pay for Mrs Brazel.
Mrs Brazel brought a claim before the Employment Tribunal for unlawful deductions from wages. The Tribunal dismissed her claim. The Employment Appeal Tribunal allowed her appeal, and the Court of Appeal dismissed the Trust’s further appeal. The Harpur Trust appealed to the Supreme Court.
The Issue(s)
The central question was whether a part-year worker on a permanent contract is entitled to 5.6 weeks’ paid annual leave calculated using the statutory Calendar Week Method, or whether that entitlement must be pro-rated to reflect the proportion of weeks actually worked in the year. Specifically:
Must the WTR be interpreted to reflect a ‘conformity principle’?
The Harpur Trust argued that the Court of Justice of the European Union (‘CJEU’) case law established a principle that leave entitlement must be proportionate to time actually worked, and that the WTR should be interpreted consistently with this principle via the Marleasing doctrine of conforming interpretation.
Were the alternative calculation methods permissible?
The Trust proposed two alternative methods — the Percentage Method and the Worked Year Method — and argued these were necessary to avoid what it characterised as an absurd outcome where part-year workers receive proportionately more holiday pay than full-time workers.
The Court’s Reasoning
The conformity principle and EU law
The Court, in a judgment delivered by Lady Rose and Lady Arden (with whom Lord Hodge, Lord Briggs and Lord Burrows agreed), accepted that the CJEU’s case law, including QH v Varhoven kasatsionen sad na Republika Bulgaria (C-762/18), supports the general proposition that under the Working Time Directive (‘WTD’), leave entitlement is in principle determined by reference to periods of actual work. However, the Court emphasised that the WTD sets only minimum requirements, and Article 15 expressly preserves member states’ rights to introduce more favourable provisions.
Although the CJEU’s case law suggests that in general, the minimum entitlements prescribed by the WTD are calculated by reference to work actually carried out by the worker (subject to exceptions explained in, for example, QH and Dicu), the WTD does not prevent a more generous provision being made by domestic law.
The Court held that even if the WTR produce an outcome more generous to part-year workers than the WTD strictly requires, this does not breach EU law:
Even if, therefore, the proper construction of the WTR results in Mrs Brazel being entitled to a greater amount of leave than she might be strictly entitled to under the WTD and to a proportionately greater leave requirement than full-time workers, such a construction is compliant with the WTD.
Statutory interpretation of the WTR
The Court found that the WTR, properly construed, do not incorporate the conformity principle for calculating the duration of leave. Regulations 13 and 13A provide for 5.6 weeks’ leave without any mechanism for reducing that entitlement based on weeks not worked. Critically, the Court noted that where Parliament intended apportionment, it provided expressly for it — regulations 13(5) and 13A(5) apportion leave for workers starting employment mid-year on a time basis, not a work-done basis. The same approach is taken in regulation 14 (termination mid-year) and regulation 15A (first year of employment).
There is no provision in regulations 13 and 13A of the WTR for the entitlement to annual leave to be calculated by excluding the weeks where no work is performed. If the conformity principle were the basis for the entitlement to leave governed by regulations 13 and 13A, there would have to be a provision like section 224.
The incorporation of section 224 of the 1996 Act into regulation 16 for calculating a week’s pay — but not for calculating the duration of leave — was treated as a deliberate legislative choice:
The incorporation into the WTR of the means of calculating an average week’s pay set out in section 224 of the 1996 Act for workers, including those who work very irregular hours, was a policy choice made by Parliament according to which the number of hours worked affects the amount of a week’s pay in some circumstances but not in others.
Rejection of the alternative methods
The Court rejected both the Percentage Method and the Worked Year Method as fundamentally inconsistent with the statutory scheme. The Percentage Method bypasses the requirement to calculate a week’s pay under section 224. The Worked Year Method redefines ‘week’ in a manner incompatible with its ordinary meaning. The Court described these methods as amounting to:
an entirely new scheme for calculating holiday pay entitlement.
The Court also rejected the argument from absurdity. While acknowledging that the Calendar Week Method could produce a proportionately higher holiday pay percentage for part-year workers, the Court held:
We do not regard any slight favouring of workers with a highly atypical work pattern as being so absurd as to justify the wholesale revision of the statutory scheme which the Harpur Trust’s alternative methods require.
The Marleasing argument and hypothetical workers
The Trust argued that hypothetical workers (such as a ‘Transitioning Up’ worker) might receive less than their WTD entitlement under the Calendar Week Method, thereby engaging the Marleasing principle. The Court rejected this, holding that even if some hypothetical workers might be disadvantaged, that could not justify departing from the ordinary statutory meaning in a case where the claimant clearly receives at least her WTD entitlement:
Even if the application of the WTR which we consider is correct might result in a non-compliant transposition of the rights in the WTD in respect of some hypothetical workers, that does not mean that the Harpur Trust can rely on that non-compliance to justify a departure from the ordinary meaning of provisions in this case where it is clear that the Calendar Week Method results in Mrs Brazel receiving at least her entitlement under the WTD.
Section 229(2)
The Trust’s reliance on section 229(2) of the 1996 Act as a general power to arrive at a ‘just’ reference period was also dismissed. The Court held this provision was intended for specific circumstances such as apportioning lump sum bonuses, not as a general dispensing power to recalculate a week’s pay.
Practical Significance
This decision is of considerable practical importance for employers engaging part-year workers on permanent or continuing contracts, including term-time workers in education, seasonal workers, and those on zero-hours contracts who work irregularly. The ruling establishes that such workers are entitled to the full 5.6 weeks’ statutory paid annual leave without any pro-rating to reflect weeks not worked. The widely used Percentage Method (12.07%) was held to be unlawful.
The decision has implications for payroll practices across multiple sectors and confirms that the statutory scheme, while producing proportionately more generous outcomes for certain atypical workers, reflects a deliberate policy choice by Parliament. The ruling aligns with the Department for Business, Energy and Industrial Strategy guidance issued in 2020 following the Court of Appeal’s decision. Employers must calculate holiday pay using the averaging method in section 224 of the 1996 Act (as modified to a 52-week reference period from April 2020), ignoring weeks in which no remuneration was payable.
Verdict: The Supreme Court unanimously dismissed the Harpur Trust’s appeal. The Court held that the Calendar Week Method represents the correct implementation of the Working Time Regulations 1998 and is fully compliant with EU law. Part-year workers on permanent contracts are entitled to the full 5.6 weeks’ paid annual leave without pro-rating to reflect weeks not worked. Mrs Brazel’s holiday pay should be calculated using the statutory method under section 224 of the Employment Rights Act 1996, not the Percentage Method adopted by the employer.
