Term-time only holiday pay error - update

27 January 2020

Further to our recent communication, we have received a response from the Local Government Association (LGA), which states:

The calculation of holiday entitlement was, and continues to be, a matter for each individual employer, whether that be a local authority, a school governing body or an academy trust. The LGA is not undertaking an exercise to establish the various formulae that employers have adopted, but will continue to provide advice on the basis of the formula in Part 4.12. Issues regarding back pay and where liability may lay are matters for each individual employer to resolve according to their own particular circumstances.

So, there is no definitive list of affected authorities.

With their response they also provided a copy of an advisory bulletin which was sent to local authorities in November 2018, and included advice on the impending change to the Green Book:

 

TERM-TIME ONLY EMPLOYEES: CALCULATING ANNUAL LEAVE

Readers may well have seen reports about a proposed settlement of a claim brought against a local authority for the miscalculation of the annual leave entitlement of term-time only employees. 

There is no doubt a range of methods used across employers for the purposes of calculating the pro-rata annual leave entitlement of term-time only employees. 
However, a working party set up by the National Joint Council for Local Government Services (the body responsible for negotiating the Green Book) has agreed a formula that will be included in guidance on the treatment of term-time only employees that will form part of Part 4 of the Green Book. This guidance should be issued in the next few weeks. 

The model formula seeks to ensure that the payment system for term-time only employees is fair in comparison with all-year-round employees in the same organisation. The ratio of working days to days of paid leave therefore needs to be the same for both groups.
This can be illustrated in an example: 

All-year-round employees 
Assuming a five-day working week, the number of days available annually is 260.71 (52.143 weeks x 5 days). 
The annual leave comprises of: 
Basic annual leave 25 days 
Public holidays 8 days 
Extra-statutory days 2 days 
Total leave 35 days 

This means that year-round employees with this leave entitlement work 225.71 days a year (i.e.260.71 minus 35) in order to produce a paid leave entitlement of 35 days. 

Taken from Local Government Association Advisory Bulletin No 664, November 2018

The Green Book also contains worked examples which employers can use to check that the formula they are using is in line with Working Time Regulations.  

To check the formula used, you will need the following information;
  • Normal pay
  • Number of days/weeks contracted to work
  • Number of hours/days worked each day/week as a proportion of full-time hours
  • Contractual leave plus extra statutory (pro-rata for hours worked and number of weeks)
It is important to note the minimum Green Book leave entitlements:
Green Book Leave Entitlement (minimum) Employees with less than 5 years’ continuous service Employees with 5 years or more continuous service
Basic Annual Leave 21 days 25 days
Public holidays   8 days 8 days
Extra statutory   2 days 2 days
Total  31 days 35 days

You will then need to follow through the worked examples in the Green Book for each different TTO contract.

One in particular to watch out for is where term-time only staff work 5 days a week, they are then entitled to 28 days paid leave (including public holidays), but the calculations would equate to 26.325 days, so an extra 1.675 days would need to be added to this entitlement in order to meet Working time Regulations (see Green Book for full details).
    
If you find that there are errors in the calculations being used for TTO employees in your school, in the first instance you should contact your local authority HR/Payroll department for further advice.
  • Local authority maintained schools affected by this issue should contact their LA HR/Payroll departments for further advice on the implications for their staff and how the additional costs will be met.
Academies affected by this issue may face difficulties as they are no longer under local authority control.  However, most of those academies will have followed their LA formula when they were maintained schools and subsequently as academies following the TUPE process.  
  • If you are the head of an academy which is affected by this issue, and you buy in your HR provision from your LA, then you should also contact your LA for further advice on the implications for your staff and how the additional costs will be met, as you have followed the advice of your HR provider in using this calculation.
  • Academies which have transferred their HR provision away from their LA from the point of conversion will need to seek advice from their current HR provider and may also wish to take legal advice on their liability in this matter.
  • If you are a School Business Leader on less than a full-time contract, and you find that there is an error in the way YOUR annual leave has been calculated, please contact the ASCL Hotline for further advice.  

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