Holiday pay calculations after the Harpur Trust ruling

The Supreme Court ruling in Harpur Trust v Brazel (2022) settled a long-running dispute about how holiday pay should be calculated for workers with irregular or term-time-only working patterns. The ruling has ongoing implications for any employer who has workers on irregular hours — including zero-hours workers, term-time-only workers, and casual staff.

The traditional method used by many employers for irregular-hours workers was the 12.07% rule: multiply the hours worked in any period by 12.07% (which represents the holiday entitlement as a fraction of the working year) to get the holiday pay entitlement for that period. The Supreme Court said this method is wrong for workers who work for only part of the year.

The correct method for irregular-hours workers is to use the 52-week rolling average. Look back at the 52 weeks before the holiday is taken (excluding any weeks with no work — up to a maximum of 52 paid weeks). Calculate the average weekly pay across those weeks. That average is the weekly holiday pay rate.

Why does this produce higher holiday pay than the 12.07% method in many cases? Because a term-time worker who works 38 weeks a year has the same statutory minimum holiday entitlement (5.6 weeks) as a full-time worker who works 52 weeks a year. The 12.07% method implicitly reduced this entitlement. The Supreme Court said the statute does not allow for that reduction.

The ruling applies to the calculation of holiday pay, not to the amount of holiday entitlement itself. Workers on irregular hours accrue the statutory minimum 5.6 weeks per year. The Harpur Trust ruling determines what those 5.6 weeks are worth in money terms.

For employers with term-time-only staff — common in schools, nurseries, and care settings — the ruling means holiday pay must be calculated using the 52-week average method for each holiday period taken. This typically produces a higher holiday pay liability than the 12.07% approach.

For zero-hours workers, the practical impact is similar: calculate a 52-week rolling average of actual earnings (from weeks with work) and use that as the weekly rate. A zero-hours worker who has variable earnings will have a variable holiday pay rate depending on the average across the lookback window.

HMRC and ACAS guidance now reflects the Harpur Trust ruling. Employers who are still using the 12.07% method for irregular-hours workers should review their approach. Workers can claim unpaid holiday pay going back up to two years as a series of unlawful deductions from wages, and up to three months for individual deductions — the potential back-pay liability for large groups of term-time or casual workers can be significant.

See our payroll errors guide for how to approach correcting holiday pay underpayments, and ERA 2025 compliance checklist for where holiday pay sits in the broader compliance review.

Mellow calculates holiday pay using the 52-week rolling average for irregular-hours workers automatically. [See Mellow pricing →](https://mellowhr.com/pricing)