Following a European Court ruling, workers are able to carry over their right to statutory paid holiday if they have been prevented from taking it because the employer refused to pay them for it. In Smith v Pimlico Plumbers, the Employment Appeal Tribunal (EAT) held that this does not mean that the right to payment is carried over if a worker has taken unpaid holiday.
Mr Smith, a plumbing and heating engineer, worked for Pimlico Plumbers from August 2005 to May 2011 when he resigned and claimed constructive dismissal. During that time, he had taken different periods of leave but had not been paid for it. In August 2011 Mr Smith lodged a claim for holiday pay, among other things, under the Working Time Regulations (WTR). Pimlico contended that as he was a self-employed independent contractor, as opposed to a worker, he was not entitled to holiday leave and/or pay.
In the first instance, he had to prove that he was a worker under the Employment Rights Act 1996, a claim that was upheld by the Supreme Court in June 2018 (LELR 581). Having succeeded in establishing that he was a worker, he returned to the tribunal in March 2019 so that his holiday pay claim could finally be heard.
The tribunal dismissed the case on the basis that Mr Smith had not lodged a claim in relation to each holiday period he had taken within the statutory three-month time limit. Even if he had lodged his claim within that window, the decision in Bear Scotland Ltd v Fulton (LELR 531) meant that he would not have been able to claim for earlier periods as the gaps between them exceeded three months.
It also rejected his argument that the tribunal should apply the decision of the Court of Justice of the European Union (CJEU) in King v The Sash Window Workshop Ltd and anor (LELR 555). In that case, the Court held that a worker who does not take the four weeks statutory holiday leave under EU law because the employer refuses to pay for it, must be allowed to carry that holiday leave over which continues to accumulate until the worker’s employment comes to an end. The tribunal held that the decision in King did not apply to Mr Smith because he had taken holiday leave, even though he had not been paid for it.
Dismissing the appeal, the EAT held that the tribunal was correct in the way that it had interpreted the CJEU decision in King. This focused on a worker who was deterred from taking annual leave because he was told he would not be paid for it and so would be denied the right to a remedy. This is because a claim for payment under regulations 13 and 16 of the Working Time Regulations could only be made in respect of leave that was refused and where leave was actually taken.
The CJEU said that it was incompatible with EU law for workers to be forced into a situation where they had to take leave without pay and then bring proceedings to claim payment for it. As a result, a worker who has not been allowed to exercise the right to take their statutory paid holiday should be allowed to carry over the right to the four weeks paid leave under EU law until their employment ends
The EAT agreed with the tribunal that there was nothing in King to suggest that the carry-over rights in respect of statutory paid holiday leave that had not been taken (because of the employer’s failure to pay for it) applied to leave that had in fact been taken. Mr Smith’s position was different to that of Mr King in that he had taken the holiday leave and had not been precluded by domestic legislation from bringing a claim for pay in respect of it.
As the tribunal and EAT had found that the last period of holiday leave he had taken was between 18 December and 4 January 2011 his claim for payment was out of time and it had been reasonably practicable for him to have brought his claim in time.
This decision limits the effect of the decision in King with the result that a worker who has taken their statutory four weeks leave (or part of it) but not paid for it cannot carry forward the right to be paid. In those circumstances the worker must bring a claim for payment of the holidays they have taken within three months of the date on which the payment should have been made either under the Working Time Regulations or as an unlawful deduction under the Employment Rights Act 1996.