Case Update: L Lloyd v Elmhurst School Limited

School holidays can be included in national minimum wages calculations: L Lloyd -v- Elmhurst School Limited [2022] EAT 169

Linda Lloyd (“LL”) worked part-time at Elmhurst School (“the school”). LL only worked during school term-time but received the same monthly salary throughout the entire calendar year.

LL’s employment contract said she was entitled to the “usual school holidays” as “holidays with pay”. LL brought an unlawful deduction from wages claim on the basis that she was paid less than the National Minimum Wage (“NMW”). The key question in LL’s claim was if her basic hours should be calculated over 52 weeks (as LL claimed), 40 weeks (as the School claimed) or some other reference period.

The Employment Tribunal (“ET”) considered that LL’s basic hours for NMW purposes were her part-time hours over 40 weeks. It based its decision on the fact that LL only worked during school term-time. It did not consider LL’s contractual entitlement to “holidays with pay” during the school holidays meant that time should count as working activity, as she was not actually working during that time.

LL appealed the decision to the Employment Appeal Tribunal (“EAT”), and Deputy Judge Michael Ford KC allowed the appeal. LL appealed on the basis that the ET had wrongly focused on the hours she actually worked rather than correctly interpreting her employment contract to determine her basic hours. The school’s position was that the paid absences could count towards basic hours, but only if they were absences from work i.e. leave taken at a time a worker would otherwise be working.

The EAT found that the ET was wrong to only take into account the weeks LL actually worked, to which it had added her statutory entitlement to paid holiday, rather than identifying her basic hours from her employment contract alone. LL’s basic hours for the purpose of the NMW are identified by reference to her employment contract. They could include non-working hours for which pay was due e.g. paid holidays or paid sick leave.

As a salaried hours worker who was contractually entitled to receive normal salary for a period of contractual holiday, LL’s absences from work during school holidays could count towards her basic hours even though the absences were at times LL would not have been in work (as she only worked during school term-time).

This is a helpful decision for any term-time workers who are contractually entitled to paid holidays during non-term time and/or paid sick leave.

Author: Tony Rippon, Associate Solicitor, Employment