How the 2022 Supreme Court judgement on holiday entitlement impacts care providers
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Seminar presented by our Backend Team Leader Giulio Troccoli-Allard at the Health Plus Care Show 2023
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How the 2022 Supreme Court judgement on holiday entitlement impacts care providers
- 1. How the 2022 Supreme Court judgement on holiday entitlement impacts care providers AWARD WINNING ALL-IN-ONE HOME CARE MANAGEMENT SOFTWARE
- 2. 2 • CareLineLive is an award-winning, all- in-one management software for home care providers. Who we are • Our mantra is “better systems mean better care”. • It improves efficiency, capacity and compliance.
- 3. 3 • Software developer at CareLineLive • Not a lawyer or employment expert • Seek professional advice if necessary Who I am
- 4. 4 • Situation before UK Supreme Court (UKSC) judgment Outline • UKSC case • What it means for zero-hours contract workers
- 5. 5 • Accrual System (12.07%) Previous situation • Hourly Rate • Calendar Week Method (modified)
- 6. 6 The Supreme Court’s case • Music teacher, part-year worker • Average weekly pay • 28 days entitlement • The school moved to the Accrual system with hourly rate
- 7. 7 Implications for irregular- hours worker • Carers are are entitled to 28 days • Leave to be taken in days (or half- days) • Pay must be calculated using the Calendar Week Method
- 8. 8 • It’s not fair (possibly) Concerns • It’s about pay, not entitlement
- 9. 9 Example – George Starts March 21st , 2022 - £12.00/hr Leave year from Jan 1st to Dec 31st 15hrs/wk in March, April and May (10 weeks) Paid annual leave from May 30th, 2022 to June 12th, 2022 (2 weeks) 30hrs/wk from June to November(24 weeks), 10 hrs @ £15.00 Paid annual leave from November 27th, 2022
- 10. 10 Example – George 1. Accrual system – Hourly rate 2. Accrual system – Calendar Week Method (modified) 3. Statutory entitlement – Calendar Week Method We are going to look at how much George would be paid in three scenarios: All calculations have been done with all decimal places. The results have been rounded only at the end, to minimise rounding issues. This is in accordance with the gov.uk guidance.
- 11. 11 Example – George – Accrual system, hourly rate In June he has accrued (15 hrs * 10 wks) * 12.07% = 18.105 hrs Considering a 15 hrs/wk, this correspond to 1.207 weeks, so George will be paid for all 18.105 hrs In December he has accrued (15 hrs * 10 wks + 30 hrs * 24wks) * 12.07% = 105.009 hrs He will be paid £12.00 * 18.105 hrs = £217.26 He has already taken 18.105 hrs so he is going to be paid for 105.009 – 18.105 = 86.904hrs He will be paid £12.00 * 86.904 hrs = £1,042.85 In 2022 George has received a total of £1,260.11 in paid leave Considering his average weekly hours, this corresponds to 4.1038 wks
- 12. 12 Example – George – Accrual system, Calendar Week Method (modified) In June he has accrued (15 hrs * 10 wks) * 12.07% = 18.105 hrs Considering a 15 hrs/wk, this correspond to 1.207 weeks, so George will be paid for all 18.105 hrs He has worked for 15 hrs * 10 wks = 150 hrs and received £12.00 * 150 hrs = £1,800 His average hourly rate is £1,800 / 150 hrs = £12.00 He will be paid £12.00 * 18.105 hrs = £217.26 1/2
- 13. 13 Example – George – Accrual system, Calendar Week Method (modified) In December he has accrued (15 hrs * 10 wks + 30 hrs * 24wks) * 12.07% = 105.009 hrs He has already taken 18.105 hrs so he is going to be paid for 105.009 – 18.105 = 86.904hrs He has worked for (15 hrs * 10 wks) + (30 hrs * 24 wks) = 900 hrs and received (£12.00 * 150 hrs) + (£12.00 * 20 hrs * 24 wks) + (£15.00 * 10 hrs * 24 wks) = £11,160 His average hourly rate is therefore £11,160 / 900 hrs = £12.40 2/2 He will be paid £12.40 * 86.904 hrs = £1,077.61 In 2022 George has received a total of £1,294.87 in paid leave
- 14. 14 Example – George – Statutory entitlement, Calendar Week Method He is entitled to 23.5 days of paid annual leave In June his average weekly pay is (£12.00 * 15 hrs * 10 wks) / 10 wks = £180.00 He will be paid £180.00 * 2 wks = £360.00 1/2
- 15. 15 Example – George – Statutory entitlement, Calendar Week Method Let’s apply the Calendar Week Method: £12.00 * 15 hrs * 10 wks = £1,800.00 + £360.00 = £ 360.00 + 2.2 £12.00 * 20 hrs * 24 wks = £5,760.00 + £15.00 * 10 hrs * 24 wks = £3,600.00 For a total of £11,520.00, and therefore his average weekly pay is £11,520.00 / 36 wks = £320.00 He has 23.5 – 14 = 9.5 days left, or 9.5 / 7 = 1.36 wks He will be paid £320.00 * 1.36 wks = £434.29 In 2022 George has received a total of £794.29 in paid leave
- 16. 16 Example – George – Summary Accrual system , hourly rate £1,260.11 in paid leave Accrual system, Calendar Week Method (modified) £1,294.87 in paid leave Statutory entitlement – Calendar Week Method £794.29 in paid leave 1/2
- 17. Thank you for listening Carelinelive.com Download the presentation at Slideshare Or via the blog on our website Any questions?
Editor's Notes
- [click] CareLineLive is an award-winning, all-in-one management software for home care providers. [click] It improves efficiency, capacity and compliance. [click] Our mantra is “better systems mean better care”.
- My name is Giulio Troccoli-Allard [click] and I am a software developer at CareLineLive. I have been researching the implication of the UKSC judgement as thoroughly as I could, but it is a complicated subject [click] I’m not a lawyer and I don’t have expertise in employment law or anything like that. I’m just a software developer. [click] You may want to seek professional advice for your specific use cases.
- So, what are going to talk about today? [click] Well, we will have a look at how holiday entitlement and leave pay has been done so far. [click] We will look briefly at the case that was brought forward to the UKSC [click] And finally, we will talk about how the judgement impact on workers on zero-hours contract
- Before we start I just want to remind you that we are going to talk about workers on zero-hours contract. Other type of employment may be effected by the judgment, but that’s out of scope for this presentation. [click] It was generally accepted, as recommended by Acas I believe, that these workers would accrue leave depending on the number of hours worked. Specifically, they would accrue 12.07% hours of leave for every hour worked. This percentage comes from 52 weeks in a year, or 260 weekdays. If we take out the number of statutory leave, which is 28, we get 232 working days, and 28 is 12.07% of 232. As I said, this was and still is widely accepted as the correct and fair way. We will see later that the Supreme Court disagrees. Now that we know how many days, or hours, they should be paid for, there were basically two ways employers were calculating how much to pay them. [click] The first one is the simplest: just pay them their hourly rate. It’s very simple, but it’s not always possible as workers may have different rates for different days or different hours in the day for example. [click] The second method is a variation of the Calendar Week Method. This is a method, described in the WTR, to calculate the average weekly pay for a worker. It uses a reference period of 12 weeks, amended to 52 weeks from 6 April 2020, plus some other rules. The idea behind it is that a worker should not be treated, with the regards to pay, less favourably when they are on leave than when they are working. I said “modified” there because, the Calendar Week Method was designed for weekly pay, not hourly. The week was chosen as a reference because it’s always the same length, always 7 days, unlikely the month or the year. But the accrual system gives us an entitlement in hours not weeks. What employers do then, was to also calculate the average weekly hours, with the same constraints of the Calendar Week Method, and then calculate an average hourly rate. And that was used to pay for leave.
- [click] The case brought to the Supreme Court was about a music teacher. She was employed by the school on a continuous contract, i.e. she was in employment for the full leave year, but worked only on school terms. She would take her leave during school breaks. The school originally gave her the 28 days of statutory paid annual leave, and was using the Calendar Week Method to calculate how much to pay her. [click] They then decided to use the Accrual system, and pay her using her standard hourly rate. The teacher sued them, and the case eventually reached the UKSC. [click] As we know the Court decided in her favour, and the two main outcomes from the judgments are: [click] all workers are entitled to 28 days of paid annual leave, irrespectively of the number of hours they worked. This is the important part: it doesn’t matter how many hours you work, if you work irregular hours you are entitled to 28 days of paid annual leave. This completely rejects the Accrual system. [click] The Court also said that the only correct way to calculate leave pay is by using the Calendar Weeks Method. They did acknowledge that the system may result in some unfair treatment, or rather, a more favourable treatment for some irregular hours workers. But in their view, those are edge cases and they don’t grant striking down the legislation.
- We’ve seen how employers are currently calculating leave entitlement and pay, what the case to the UKSC was and what their judgment was. But does all this impact us? [click] All workers on an irregular-hours contract, such as a zero-hours contract, are entitled to 28 days of paid annual leave. I mention the carers in this slide because I assume your carers are all employed on a continuous zero-hours contract. But this is in general for all employees actually, on any kind of contract, apart from part-time employees, but that’s for another day. The SC argued that even though these employees may not work every day, or every week, or even every month, they are still employed for the whole of the leave year. [click] Now that leave is not accrued any longer, in my opinion, leave should be taken in days or half day. I admit, this does not come directly from the Supreme Court, but it makes sense as a consequence of a mix of legislation and advice on the gov.uk website. The law says that when the entitlement is pro-rated, for example when an employee starts or leave, the entitlement cannot not be rounded down, and the gov.uk website says that ”in certain circumstances it must be rounded up”. It’s not clear in which cases or if it is left to the employer. It’s also left to the employer and employee to agree on how to take a fraction of the entitlement. For example, if an employee is entitled to 12.4 days, how is that 0.4 of a day supposed to be used? [click] Pay must be calculated using the Calendar Weeks Method. Once we know the average weekly pay, we can easily calculate the average daily pay. I mentioned it earlier, but it’s worth repeating it now because it’s clear how that make sense. The reason why the week was chosen as reference is that it is always the same length, 7 days, as opposed to a month or a year, which are never quite the same number of days or weeks.
- I have given this talk a few times to some of out clients, and amongst the various questions and concerns they raise there is one that almost always comes up. [click] It’s not fair on full-time employees. Why would someone working maybe half the hours be entitled to the same number of paid annual leave? In fact, part-time employees are not, and their entitlement is pro-rated. How is it fair? Well, one may say it’s the law, it’s supposed to be fair but it may not be, and the role of the UKSC is to clarify the law. It’s Parliament’s job to make it fair. [click] But there is another aspect that must be taken into account: pay. Yes, everybody is entitled to 28 days, but how much they are paid does indeed depend on the number of hours they have worked. In an extreme case, consider an employee on a zero-hour contract who has not worked a single hour. They are entitled to 28 days of paid annual leave, and they take it all. How much are they going to be paid? Nothing, nada, nichts. As I promised we are now going to look at a few examples, which will hopefully clarify things and there won’t be any need for any questions at the end. [fingers crosses] Before we start though, I want to make some assumptions: [click] The leave year is from January 1st to December 31st [click] All examples use the statutory entitlement of 28 days. [click] Finally, all calculations are done with all decimal places, However, at the end, the entitlement is rounder up to the nearest day or half-day. This is in accordance with the gov.co.uk guidance.
- So, let’s use a more realistic example: George [click] He starts on March 21st, 2022 and his hourly rate is £12.00 [click] The company’s leave year is from Jan 1st to Dec 31st. [click] During March, April and May he works 15 hours a week [click] He then takes 2 weeks of paid annual leave at the beginning of June [click] Then he increases his workload and works 30 hours a week. However, for 10 hours a week he received a £3.00 uplifting as they are during the night [click] He then finally takes all his remaining paid annual leave
- This takes us to the end of this presentation. [click] Just a reminder you can download it on SlideShare or via our website. [click] I will now take some questions.