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EAT confirms worker cannot carry over payment for unpaid holiday taken

The Employment Appeal Tribunal has decided that Mr Smith, a worker for Pimlico Plumbers, was not entitled to holiday pay in relation to holiday which he had taken but had not been paid for.

This contrasts with the decision of the European Court of Justice in the case of King v The Sash Window Workshop Ltd, where it was held that Mr King was entitled to pay for holidays he had been prevented from taking.

Background

Under the Working Time Regulations (WTR), workers (but not self-employed contractors) are entitled to paid holiday. Workers must use their right to paid annual leave in that given year, or they lose it (unless there are exceptional circumstances).

Mr Smith worked for Pimlico Plumbers as a plumbing and heating engineer between August 2005 and May 2011.

Pimlico Plumbers initially maintained that that Mr Smith was a self-employed independent contractor during this time, and that, on this basis Mr Smith had no entitlement to paid holiday.

Following his suspension by Pimlico Plumbers in May 2011, Mr Smith issued a claim in the Employment Tribunal for a range of issues, including unpaid holiday pay.

His claims required the Employment Tribunal to consider Mr Smith’s employment status, and to establish whether Mr Smith was a self-employed independent contractor, or in fact, a worker for Pimlico Plumbers.

Following various appeals, the case was eventually heard in the Supreme Court, which unanimously held that Mr Smith was a worker, meaning that Mr Smith was entitled to certain employment rights and protections, including paid holiday. For more details on the Supreme Court’s decision, please see our article here.

Mr Smith’s case was remitted to the Employment Tribunal to decide Mr Smith’s claim for holiday pay (amongst others).

Claim for Holiday Pay

On the facts, the Employment Tribunal rejected Mr Smith’s claim for holiday pay, on the basis that his claim had been bought out of time.

The Employment Tribunal also did not believe that the ECJ’s decision in King entitled Mr Smith to bring a claim in respect of unpaid annual leave that he had taken. Mr Smith appealed to the EAT, who dismissed the appeal.

The EAT confirmed the Employment Tribunal was correct in its interpretation of the ECJ’s decision in King. This was on the basis that Mr Smith was claiming payment for annual leave that he had taken, whereas in King, the claim was for holiday that had not been taken because the employer did not pay holiday pay, and therefore the claimant was entitled to carry-over rights.

The EAT also agreed that the claim was out of time, and that it was reasonably practicable for Mr Smith to have bought the claim within the required time limits.

What lessons can be learnt

The EAT’s decision in Smith provides employers with some clarity that, if a worker chooses to take holiday that is unpaid, that worker will not be entitled to the same carry-over rights as a worker who is deterred from taking holiday because it is unpaid.

The decision also reiterates the importance of ensuring that deadlines are met. The Tribunal calculated that, in relation to Mr Smith’s claim for holiday pay over the Christmas period in 2010, Mr Smith should have been paid this on 4 February 2011 as this was the next payslip after Mr Smith’s absence. On this basis, Mr Smith’s claim for holiday pay should have been bought on or before 4 May 2011, whereas he did not lodge the claim until three months later (on 1 August 2011).

For further assistance on holiday pay, or any other employment matters please contact our Employment Team who will be more than happy to assist you.

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