In this long-running case, which started in the Employment Tribunal in 2011, the Supreme Court has clarified the calculation of holiday pay for workers who work irregular hours on permanent contracts.

After a journey through the original Tribunal, the Employment Appeal Tribunal and the Court of Appeal, the Supreme Court agreed that the “calendar week method” represents the correct implementation of the Working Time Regulations. It concluded that the amount of holiday, and associated holiday pay, to which a part-time worker on a permanent contract is entitled is not pro-rated to that of a full-time worker under UK law. EU law permits, rather than requires, pro-rating by domestic law in such situations.

 

This case will affect employers who employ permanent workers on irregular hours. Such employees could be engaged on fixed-term contracts to avoid this issue in future. Where some employees are affected, their employers should establish if any back payments to holiday pay are required. This in turn may affect historic levels of pensionable pay and the calculation of related DB pension benefits.