A worker has won a landmark legal holiday pay case at the Court of Appeal.
Why do you need to know about this?
This case may well have very serious consequences for those who employed workers, denied their status as workers and failed to remunerate their holiday and or failed to ensure that they could take those rights, including the historic rights. These workers will potentially be able to claim holiday back pay dating back to when they started work (or 1998 when the WTRs were introduced).
What do you need to think about?
Does your business use sub-contractors regularly or have a bank of sub-contractors who work for you who could really be described as workers or employees?
Mr Smith worked for Pimlico Plumbers as a plumbing and heating engineer. During the course of the engagement, Pimlico Plumbers maintained that Mr Smith was not a worker and was therefore not entitled to paid annual leave. Mr Smith did take periods of unpaid annual leave despite not being paid for it.
Following the termination of his contract, Mr Smith brought a number of claims including a holiday pay claim in relation to his unpaid annual leave. Before his claim for holiday pay could be considered, his employment status had to be determined. The case progressed all the way to the Supreme Court which decided in 2018 that Mr Smith had worker status and was therefore entitled to holiday pay because he was expected to perform work personally, meaning he did not have the right to send a substitute in his place if he could not do the work.
Mr Smith then went on to pursue his claim for holiday pay.
The Employment Tribunal rejected Mr Smith’s claim for holiday pay because they found that time limit for Mr Smith to bring his claim started from the date of his last unpaid period of leave, and not from the date of termination and therefore his claim was out of time. Mr Smith appealed to the Employment Appeal Tribunal but was unsuccessful.
Mr Smith then appealed to the Court of Appeal. The Court of Appeal decided that Mr Smith’s claim was for the loss of the right to four weeks paid annual leave granted to workers under the European Working Time Directive (EWTD).
The Court of Appeal held that Pimlico had failed to acknowledge that Mr Smith had the statutory right to paid annual leave by treating him as self-employed. Therefore, Mr Smith’s right to EWTD paid annual leave had carried over, accumulated throughout his employment, and crystallised on termination. This means that he was entitled to payment for all accrued but unpaid EWTD annual leave at the point of termination. In Mr Smith’s case this was an accumulation of untaken leave over a period of 6 years;
It was found that Mr Smith’s claim was within time because his termination date was 3 May 2011 and he issued his claim on 1 August 2011 which was the day before the deadline.
We can help
Holiday pay is notoriously complex and so is employment status. If you need any assistance with the issues raised in this update please do not hesitate to get in touch via the contact links below.