Holiday Pay Update: Smith v Pimlico Plumbers
In 2017, in the case of King v Sash Windows, the CJEU established that a worker can carry over unlimited annual leave which they have been prevented from taking because the employer refuses to pay for it. The CJEU said domestic time limits for bringing such a claim – for example, our 3-month time limit to bring an employment claim for unpaid holiday under the Working Time Regulations 1998 or unlawful deduction from wages – should not prevent workers from exercising important EU rights. In Smith v Pimlico Plumbers, the EAT has looked at whether a worker can carry forward holiday that he has taken, but not been paid for, to future years.
Mr Smith worked for Pimlico Plumbers as a plumbing and heating engineer. The business maintained that he and other Pimlico Plumbers were self-employed and not entitled to paid holiday. Mr Smith took periods of unpaid leave between 2005 and 2011. He stopped working for Pimlico Plumbers in 2011 and brought a claim for unpaid holiday pay. In 2018, in a groundbreaking judgment for the gig economy, the Supreme Court decided that Mr Smith and other Pimlico Plumbers were workers, not self-employed. As such they were entitled to paid holiday. However, an employment tribunal went on to dismiss Mr Smith’s holiday pay claim because it had been brought out of time. They did not believe that King entitled Mr Smith to ‘carry over’ a right to payment for unpaid annual leave that had already been taken.
The EAT agreed. King was about carry over and payment in lieu of accrued but untaken holiday, not holiday that had been taken but unpaid. Mr Smith’s remedy – for holiday which had been taken but unpaid – was a holiday pay or unlawful deduction from wages claim, rather than carry over of annual leave that had already been taken. Mr Smith’s last period of unpaid holiday was January 2011. He should have been paid for that in February 2011. Therefore a claim should have been lodged in May 2011 at the latest. When Mr Smith lodged his claim in August 2011, it was too late. The EAT also confirmed that Bear Scotland – the case which said that a gap more than 3 months in a series of deductions would ‘break the chain’, meaning earlier deductions would be out of time – was still good law.
This case ends a long running saga for Mr Smith and his personal holiday claim, although his litigation more generally has had an enormous impact on wider workers’ rights. Employers will welcome the clarity that claims for unpaid but taken holiday cannot be carried forward in the same way as that which is untaken. The holiday pay saga continues at pace though. The case of Agnew – which decided, contrary to Bear Scotland, that gaps of more than 3 months in a series of holiday pay deductions may not be fatal – is going to the Supreme Court in June. This is another issue which employers hope will be put to bed in summer – in their favour.