A recent Employment Appeal Tribunal case looked at how national minimum wage should be looked at where the employee worked term-time only.
National Minimum Wage and term-time working
The Case
In Lloyd v Elmhurst School Limited Ms Lloyd was engaged as a learning support assistant at a private school. She worked 21 hours per week during term time (36 weeks per year). Her contract of employment included a clause which stated that she was “entitled to the usual school holidays with pay”.
She was paid in twelve monthly instalments across the year. She brought a claim of unlawful deduction from wages alleging that she had been paid less than the national minimum wage. She argued that the clause in her contract which stated that she was entitled to the usual school holidays with pay meant that, in calculating her hourly pay, her salary should be averaged over 52 weeks of the year (as all the weeks she didn’t work were “usual school holidays”).
Her employer argued the tribunal should look at the hours the employee actually worked each week (21 hours), how many weeks she worked those hours (36 weeks), add on statutory holiday entitlement (agreed on appeal to be 5.6 weeks) and take an average of pay over this period (a total of 41.6 weeks) to establish if her pay was compliant with the national minimum wage.
Applying this analysis her pay was above national minimum rates but applying the employee’s analysis, it was not.
She was paid in twelve monthly instalments across the year. She brought a claim of unlawful deduction from wages alleging that she had been paid less than the national minimum wage. She argued that the clause in her contract which stated that she was entitled to the usual school holidays with pay meant that, in calculating her hourly pay, her salary should be averaged over 52 weeks of the year (as all the weeks she didn’t work were “usual school holidays”).
Her employer argued the tribunal should look at the hours the employee actually worked each week (21 hours), how many weeks she worked those hours (36 weeks), add on statutory holiday entitlement (agreed on appeal to be 5.6 weeks) and take an average of pay over this period (a total of 41.6 weeks) to establish if her pay was compliant with the national minimum wage.
Applying this analysis her pay was above national minimum rates but applying the employee’s analysis, it was not.
The Decision
The tribunal rejected her claim and agreed with the employer’s analysis. The EAT overturned the decision and said that it does not matter when ‘in fact’ the employee was working for national minimum wage calculations. If the wording of the contract of employment indicates that absences will be ‘fully paid’ then these ‘fully paid’ absence periods should also be taken into account when working out whether an employee’s average pay is above national minimum wage requirements.
What Can We Learn?
This case, although specific to its own facts, is a useful reminder to those who engage or employ workers on atypical working patterns such as term time working. Standard contractual wording may need to be amended or removed to avoid unintended consequences. If an employee works term-time only and is paid across twelve months of the year the contract should make it clear that their pay includes their statutory holiday entitlement and that, although their pay is averaged across the year, they are not entitled to pay during school holidays.
Employers should note that this case relates to employees with true atypical working patterns, in this case term time working – it does not relate to standard part-time working arrangements.
Employers should note that this case relates to employees with true atypical working patterns, in this case term time working – it does not relate to standard part-time working arrangements.