Working Time: unpaid holiday


23 March 2021

The Employment Appeal Tribunal (EAT) has considered whether a worker who was permitted to take annual leave, but who was not paid for it, is permitted to carry over and claim the right to be paid in a future holiday year.

Smith v Pimlico Plumbers Limited [2021] UKEAT 0211/19/1703

Facts

Mr Smith, a plumber, was held by the Supreme Court in 2018 to be a ‘worker’ and therefore entitled to certain rights, including paid holiday under the Working Time Regulations 1998 (WTR).

Having established the right to receive paid holiday, Mr Smith’s case returned to the employment tribunal. He claimed unpaid holiday pay that had accrued throughout his employment. Whilst he had been permitted to take periods of holiday, these periods had not been paid as required by the WTR.
The employment tribunal held that his claim was out of time, on the basis that his claim had to be brought within three months of the period of unpaid holiday. The tribunal was satisfied that the principles applying to the carry forward of untaken holiday entitlement did not apply in circumstances where the holiday had been taken, but not paid. Mr Smith appealed to the EAT.

EAT decision

The EAT has dismissed the appeal, upholding the tribunal’s decision that Mr Smith could not carry forward his entitlement to holiday pay from year to year. The right established by the European Court of Justice (in the case of King v The Sash Window Workshop Ltd and another, C-214/16) to carry forward only applies in respect of accrued but untaken leave, not to the pay if unpaid leave has been taken. This is on the basis that a worker might be discouraged from taking leave if it is unpaid.

The EAT also agreed with the tribunal’s conclusion that even if Mr Smith’s claim had been in time in relation to the latest deduction, his claim for earlier holiday pay could not succeed on the basis that it was a ‘series of deductions’. Following the EAT’s previous decision in Bear Scotland Ltd v Fulton and others (UKEATS/0047/13), a gap of three months or more between deductions will prevent a series of deductions arising for the purposes of an unlawful deductions from wages claim.

Consequences

This decision will be welcome news for employers, particularly those in the ‘gig economy’ where large groups of workers have recently established the right to receive paid holiday. Provided those individuals have taken unpaid time off work as ‘holiday’, it will be difficult for them to establish a claim for back payments of holiday pay, which would otherwise be a substantial potential liability for the employer.

These articles are from the March 2021 issue of Employment and Immigration Law Update, our monthly newsletter for HR professionals. To download the latest issue, please visit  the newsletter section of our website. For further information please contact Liz Stevens or another member of Birketts' Employment Law Team.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2021.

Author

Liz Stevens

Professional Support Lawyer

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