Getting leave calculations right for part-time workers can be a headache. For example, when:
- a full-time employee reduces to part-time hours; or
- a part-time employee increases their hours.
The pro rata principle means that a part-time worker is entitled, proportionally, to receive the same amount of holiday as a full-time worker. A recent judgment from the European Court of Justice (ECJ) provides some helpful clarification on the calculations necessary when working patterns change in these ways.
An earlier ECJ case from Austria, Zentralbetriebsrat der Landeskrankenhauser v Land Tirol, considered the scenario where a full-time employee moves to part-time hours, during the employer’s holiday year.
What did that case say?
Tirol made clear that an employee moving from full-time retains all of the paid annual leave they accrued during the period they were full-time. They must not have that accrued amount reduced by going part-time.
The accrual of annual leave must be calculated separately for each period where the working pattern differs. Once the employee is part-time, the accrual of new paid annual leave entitlement needs to be calculated pro rata using the new number of hours worked.
Example: Janet is full-time on the first day of the holiday year. Her holiday entitlement is 28 days. After six months of the holiday year, she reduces her hours to a 0.5fte contract. Assuming there are no further changes to her hours, Janet’s total entitlement will be: 14 days (28 x 6/12 months) + 7 days (28 x 0.5 x 6/12) = 21 days
This sounds like common sense?
Yes, it does. Calculations can of course become more complicated, for example where leave entitlement needs to be expressed in days for the period of full-time work, and (perhaps) in fractions of days or hours for the period of part-time work after a change, but the basic principles are made clear in the case.
What about the more recent case?
In Greenfield v The Care Bureau Ltd, the ECJ considered the opposite scenario. Ms Greenfield was already part-time (working one day per week), and had taken seven days of leave. Soon after, she significantly increased her hours. When she requested some holiday however, it was refused on the basis that she had already exhausted her entitlement (before the increase to her hours and based on working one day a week).
What was the decision?
The ECJ confirmed that where a worker increases their hours there is no requirement to retrospectively adjust leave they have already accrued (and perhaps taken).
The decision makes clear that, from the point working hours increase, a new calculation must be made to update the paid leave entitlement, based on those new working hours for the period to which those new hours apply. Since the purpose of annual leave is to get rest from the work required under a contract, annual leave entitlements must be calculated on the basis of the work actually required.
Example: John is part-time, on a 0.5fte contract on the first day of the holiday year. The full-time equivalent holiday entitlement is 28 days. After three months of the holiday year, he increases his hours to a 0.75fte contract. Assuming there are no further changes to his hours, John’s total entitlement will be: 3.5 days (28 x 0.5 x 3/12 months) + 15.75 days (28 x 0.75 x 9/12) = 19.25 days
Paid annual leave actually taken during the (first) period of part-time work which exceed the worker’s right to paid annual leave at that time must be deducted from the newly accumulated leave during the period when the worker increased their hours.
This sounds like common sense again?
Again, yes. Given the judgment in Tirol the principles covered in Greenfield appear consistent.
What about leavers?
The same principles still apply, whether you are calculating leave during employment, or for a leaver (for example if calculating any payment in lieu of untaken holiday).
So these cases make things clear?
They do, but grey areas remain, for example, when you need to calculate holiday pay in the above scenarios. The question of whether a ‘week’s pay’ should be calculated based on pay at the time that leave is taken or at the time the leave accrued according to the relevant working pattern is unresolved.
A literal reading of the Working Time Regulations 1998 (WTR) suggests that a ‘week’s pay’ should be calculated with reference to the worker’s pay at the time when the leave is taken. It means that in an example like Tirol, if the worker takes an accrued week’s leave after changing to part-time work, under the WTR their ‘week’s holiday pay’ would reflect the part-time rather than full-time salary. This perhaps does not sit easily with the ECJ cases and if this is a specific issue in your business, we would recommend that you take professional advice.
Mark Roby is a HR advisor and paralegal based in our Truro office. If you would like to contact Mark about any of the content in this article, then please call 01872 265100 or email employment@stephens-scown.co.uk.