What is happening/does this affect me?
Many employers have used the 12.07% method for calculating holiday allowance for part-year or ad-hoc workers.
In 2019, an Employment Appeals Tribunal, in response to Harpur Trust v Brazel, held that the 12.07% method is legally incorrect and holidays should not be calculated on a pro-rata basis in this way.
The judgement of this appeal was published on 20th July 2022, when the Supreme Court dismissed the appeal and agreed with the ruling that the 12.07% method to calculate holiday is unlawful.
Q, What other types of holidays are there in the system?
Within Workforce Management, there are four different Employment Types that can be assigned to employees:
- Full Time & Part-Time - Holiday are based on the number set for their Job Title.
- Flexible - Typically used for hourly employees with variable hours and holiday is calculated using the Calendar Week Method
What do I need to do now this functionality is stopping?
Review your holiday calculations and make changes according to the Employment Rights Act 1996.
Specifically, please follow this article for a more detailed explanation of how you can do this:
What is the difference between Casual holiday and Flexible holiday?
Casual holiday uses a 12.07% of every hour worked to accrue holiday, whereas Flexible holiday uses the average days worked over the past 52 worked weeks to calculate an allowance of holiday. More information can be found here
Why are Casual holidays not carried over when the change is made?
Casual holiday works on the basis of calculating accrued holiday for every hour worked. It does not store data as holiday 'allowed'. therefore the data cannot be converted to be used in that way
If the change is made due to the recent ruling, what effective date should be used?
The employer should decide what the effective date of the change should be. The new holiday calculation will start from whatever is set as the effective date. So, if it is backdated, the holiday calculation will be backdated too
What other options do I have?
The employee could be moved to a Full or Part-time Employment type. Holidays for Full or Part-time calculate based on the FTE Days and Hours (full-time equivalent) set in the job title, or at the employee level using the FTE Override
Can the Casual employment type be removed as an option?
Yes, but all employees currently on the employment type should be moved to a different one beforehand. Once the employees have been changed, please contact Fourth's support team to arrange for the setting to be switched off
Will the Casual Holiday option be switched off automatically? If so, when?
The plan is to decommission the Casual Employee functionality eventually. When this is done, any employee still on a Casual Employment type will have their Holidays revert to Zero. There is no planned date for this to be done yet, but every effort will be made to communicate the date within plenty of time to allow customers to make their changes
Why does the Pro-rata setting specify full/part-time, and not casual
Following the announcement of the supreme court ruling, this setting has been updated to include the pro-ration of holidays allowed when moving from casual employment type.
Fourth Communities Team
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