Education Law Speed Read – 12/03/18

Brazel v The Harpur Trust [2018] UKEAT 0102/17/LA

Brazel worked in one of the Trust’s schools during term-time on a zero-hour contract. Under the contract, the Trust paid holiday pay pro rata according to the proportion of the year worked and was worked out as 12.07% of a term’s pay.

As the school’s average working year was between 32 and 35 weeks, this calculation had the effect of reducing the amount of holiday pay actually paid to below the level that would have been paid under the statutory calculation contained in s224 of the ERA (i.e. taking an average of the amount paid over the last 12 weeks worked, and ignoring non-term time).

Brazel brought a claim against the Trust, claiming that she was being underpaid holiday pay on the basis that she was a part-time worker. The Employment Tribunal dismissed this claim on the basis that, if holiday pay was not paid pro-rata, it would artificially give part-time workers proportionately higher levels of holiday pay than those employed full time.

Decision

The Employment Appeal Tribunal (EAT), upholding Brazel’s appeal, stated that the correct approach to calculating holiday pay was to base it on the average of the last 12 weeks worked.

Whilst the EAT recognised that this could produce ‘windfalls’ for part-time employees, as seen here, it found that there is no scope under the Working Time Regulations to calculate holiday pay so as to avoid full-time workers being paid proportionately less.

The main reasoning for this is that, under the Part-time Workers Regulations 2000, part-time workers are entitled to be treated no less favourably than full-time workers. Therefore, to have two separate holiday pay calculations would lead to part-time workers suffering less favourable treatment than their full-time counterparts.

Effect

This case demonstrates that adopting the approach of simply paying 12.07% annualised hours as holiday or increasing hourly rates by 12.07% to include an element for holiday pay (‘rolled up holiday pay’) may leave employers vulnerable to claims for unlawful deductions from wages. This is especially relevant where employers have a large volume of workers on part-time or zero-hour contracts.

If you have been working on this basis, you should now assess whether there has been an underpayment and consider changing your approach for future holiday payments.

London Care Ltd v Henry and Others

In London Care Ltd v Henry and Others, the Employment Appeal Tribunal considered whether there had been a service provision change for the purposes of the TUPE regulations where the provision of adult care packages was fragmented and allocated to multiple providers.

In summary

• The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) can apply where a client engages a contractor to do work on its behalf, and reassigns the contract or brings the work “in-house” (a ‘service provision change’).
• The work carried out must be “fundamentally” the same.
• One of the necessary conditions is that “immediately before the service provision change there is an organised grouping of employees situated in Great Britain which has as its principal purpose the carrying out of the activities concerned on behalf of the client”.
• Where TUPE applies on a service provision change, the employment contracts of those employees assigned to the relevant organised grouping automatically pass from the existing provider to the new provider.

The facts

Ms Henry was a carer employed by Sevacare, who provided carers to individual’s homes under a contract with Haringey Council. Sevacare organised care rotas so that the same carer would visit the same homes.

Sevacare terminated its contract, and the services in Haringay were transferred to several other providers.

Care packages were allocated to the other providers on the basis of postcodes and the new providers’ capacity. In some situations a carer’s work was split between multiple providers.

The Employment Tribunal found that there was:

• a service provision change under the TUPE regulations; and
• an organised group of employees whose employment should have transferred when the contract changed.

Employment Appeal Tribunal 

On appeal, the Employment Appeal Tribunal overturned the decision and remitted the claim to a differently constituted tribunal.

It found that the Employment Judge had erred:

• By failing to clearly identify the nature of the relevant activities. She had concluded that the activities were fundamentally the same post-transfer, but before considering the effect of fragmentation. There was no evidence that one contractor took on the majority of the work, and in relation to a number of employees it was difficult to establish where the employment should transfer, given that various service users went to different contractors. While the outgoing contractor’s work was organised on a regional basis, after the re-allocation, the work was divided on the basis of both capacity and postcodes. It was not the same and the Employment Judge failed to give proper consideration to these factors; and
• As to whether there was an organised grouping of employees, because she had confined her consideration to the purpose of an organised grouping and had not made a finding as to whether such an grouping existed and, if so, whether it had been intentionally formed.

Comment 

This case is an example that TUPE is never straightforward and, where contracts are retendered to multiple suppliers, the work can ‘fragment’ such that TUPE will no longer apply.

It is a reminder to businesses to ensure that where there is a potential service provision change, a proper analysis is undertaken, so that they fully understand their liability under TUPE.

If you have any queries on the above and how it will affect you, please do not hesitate to contact a member of our education team.