Employment Appeal Tribunal considers ability to carry over right to payment for annual leave

  • Posted

In Smith v Pimlico Plumbers, the Employment Appeal Tribunal considered whether a worker can carry over a right to payment for annual leave.

Gary Smith worked for Pimlico Plumbers from August 2005 to May 2011. During this time, Pimlico maintained that he was a self-employed independent contractor, so was not entitled to paid annual leave. Instead, Mr Smith took unpaid leave.

His employment ended after Pimlico suspended him. Mr Smith argued that Pimlico was in fundamental breach of contract.

In August 2011, Mr Smith brought an Employment Tribunal claim against Pimlico, including for arrears of holiday pay.

The case reached the Supreme Court in 2018, which held that Mr Smith had been a worker for Pimlico Plumbers, and not self-employed. Workers are entitled to paid annual leave.

The case was remitted to the Employment Tribunal, which decided that Mr Smith was not entitled to the £74,000 arrears of holiday pay he was claiming from Pimlico.

The Employment Tribunal held that the claim was brought outside of the three-month time limit, applicable to unlawful deduction from wages claims and claims for unpaid holiday pay under the Working Time Regulations.

Mr Smith had also made arguments about the European Court of Justice case, King v Sash Window Workshop Ltd and another. In King, the ECJ held that a worker who is discouraged from taking their accrued annual leave during employment because it would have been unpaid, is entitled to be paid on termination of employment for that leave. The Employment Tribunal in Mr Smith’s case did not accept that King entitled him to claim for unpaid leave that he had actually taken.

Mr Smith appealed to the Employment Appeal Tribunal, where his appeal was dismissed.

The EAT confirmed that King was not applicable in Mr Smith’s situation. King had considered payment in lieu of accrued but untaken holiday, whereas Mr Smith was seeking payment for unpaid annual leave he had taken.

The EAT also held that the Employment Tribunal was not mistaken to have concluded that it had been reasonably practicable for Mr Smith to have brought his holiday pay claim in time, which he had failed to do. His other grounds of appeal were rejected.

This case usefully clarifies that an employer’s liability under King relates to untaken holiday only.