Paying Pro-rated Holiday Pay to Zero-Hours Workers is Lawful

The ECJ has ruled that an employer was entitled to calculate holiday pay for workers employed on zero-hours contracts on a pro rata basis by reference to the hours actually worked.

In Heimann v Kaiser GmbH the claimants were employed on a “zero-hours short-time working basis”.  This was to enable them to benefit from a financial allowance payable by the Government.  When their employment was subsequently terminated, the claimants claimed holiday pay for annual leave not taken.  The employer argued that they were not entitled to paid leave as they had not worked any hours. 

The ECJ was asked whether it is lawful only to pay holiday pay in respect of hours actually worked.  The ECJ ruled that it was.  This situation is different to that of a worker on sick leave who is unable to take holiday and who is entitled to continue accruing statutory holiday whilst unable to work.  Instead, the position of a zero-hours worker is similar to that of a part-time worker, meaning that they accrue holiday pro rata based on the hours actually worked.

This is good news for employers as a finding that workers employed on zero-hours contracts have a full entitlement to statutory holiday would have been costly.  Instead, the decision makes it clear that employers are only obliged to provide casual workers employed under these types of arrangement with a pro rata statutory holiday entitlement, based on the hours actually worked.