Term-time-only contracts: what they mean for annual leave and maternity leave

Term-time-only employment contracts can be an appealing option for anyone who needs their working pattern to align with school holidays. They provide flexibility for working parents and those with caring responsibilities; however, term-time contracts can also highlight grey areas surrounding pay, holiday entitlement and family leave.

In this blog, our employment law solicitors look at term-time-only contracts in more detail and what this means for annual leave and maternity leave.

What is a term-time-only contract?

A term-time-only contract (TTO) is a working arrangement under which an employee will only work during academic terms (38 or 39 weeks of the year) and not during school holidays. Term-time-only contracts are common in schools and education support roles, although this type of working arrangement is also popular in different sectors, including healthcare.

Term-time-only contracts should not be viewed as temporary or as a casual arrangement by employers. These contracts are unique in that employees do have guaranteed work; casual arrangements (like zero-hour contracts) do not have set hours or specific days, but TTO usually offers set hours during term time only, so the work is therefore guaranteed during that time.

Term-time workers receive ‘annualised’ pay, which is where their salary is spread out evenly across the year; often they are paid monthly.

A term-time employee may remain employed throughout the full year and will continue to accrue continuous service during this time, which affects statutory rights such as notice, redundancy pay and unfair dismissal protection.

How annual leave works on a term-time-only contract

Term-time-only employees are entitled to the statutory 5.6 weeks of annual leave, which is pro-rated and automatically included in their salary. Paid time off during the term is usually not permitted unless there’s an exceptional circumstance which must be agreed on with your manager.

Employers must ensure that their arrangements comply with the Working Time Regulations 1998, relevant case law and the reforms applying to irregular hours and part-year workers from holiday years beginning on or after 1^st April 2024.

Harpur Trust v Brazel: why pro-rating leave based on hours worked was unlawful

In the case of Harpur Trust v Brazel, the Supreme Court ruled that a worker on a permanent part-year contract was entitled to 5.6 weeks’ statutory leave and that holiday entitlement shouldn’t be reduced because they worked fewer weeks in the year.

Since then, the rules have changed. If someone works irregular hours or has a TTO contract, there is now a simpler way of calculating how much paid holiday they have earned.

For holiday beginning on or after 1^st April 2024, employers can calculate it as 12.07% of the hours that person actually worked in the relevant pay period, subject to any contractual enhancements.

Because TTO employees often cannot take annual leave during term time, holiday pay is commonly reflected in the overall annual salary and paid in equal monthly instalments across the year. This can help smooth income, but employers should be clear in the contract about how pay and holiday entitlement are calculated.

How to check your annual leave is calculated properly

You can use the Government’s holiday entitlement calculator to work out how much holiday you’re entitled to.

If you think your annual leave has not been calculated properly, it’s best to speak to your employer directly. If things are not resolved, you should seek advice from an employment solicitor.

Maternity leave for term-time-only workers

Term-time-only workers are legally entitled to 52 weeks’ maternity leave and will continue to accrue statutory holiday entitlement (including bank holidays) during statutory maternity leave. This can be taken as a continuous period of absence before or following the birth of their child. The holiday is usually added to the end of the maternity leave or paid out on the employee’s return.

Maternity leave considerations for employers with term-time-only staff

Annual leave that builds up during maternity leave

Employers should consider how accrued holiday during maternity leave is dealt with, particularly where the employee is not ordinarily permitted to take annual leave during term time.

Usually, calculating accrued holiday entitlement relies on the employer knowing how many hours someone has worked. Employers can base this on a 52-week relevant period and work out an average of hours worked across that period to inform how much leave should be deemed to have accrued during maternity leave. When calculating the average weekly hours worked, employers should not include weeks where the worker is on maternity or family-related leave or off sick for any amount of time.

How Statutory Maternity Pay is calculated for term-time-only workers

TTO employees are eligible for statutory maternity pay (SMP) if they have worked for the same employer for at least 26 weeks by the 15^th week before the baby is due. They will be entitled to 90% of their average pay in the first six weeks, followed by the standard statutory rate, or 90% of their average weekly earnings (AWE), whichever is lower.

For term-time-only contracts, calculating average weekly earnings depends on how they are paid.

If pay falls during school holidays or the employee is only paid for hours worked during term time, the reference period could produce a lower average.

If the employee is off sick during the SMP reference period, reduced pay may also affect the AWE. This can affect both eligibility for SMP and the amount payable. Where SMP is not available, the employee may need to consider whether Maternity Allowance is available instead. Read more about Maternity Allowance here.

Employees should also check whether their employer offers enhanced occupational maternity pay, as any contractual scheme may provide more generous benefits than the statutory minimum.

Contact our employment law solicitors

If you have been dismissed unfairly on a term-time-only contract, or you need advice about maternity leave, our employment solicitors are here to help. Call us on 0117 325 2929 or fill in our online enquiry form.