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In the most recent litigation involving Smith v Pimlico Plumbers Ltd [2021] UKEAT 0211/19/1703, the EAT held that where a worker had been permitted to take annual leave but had not been paid for it, they were not permitted to carry over the right to payment for the holiday to future years.

The EAT distinguished the European Court of Justice’s ruling in King v Sash Window Workshop (C-214/16) [2018] ICR 693 on the basis that King established that a worker is entitled to carry over annual leave which is untaken because the employer refuses to remunerate it. It did not apply where the leave was in fact taken.

Facts

Mr Smith worked for Pimlico Plumbers Ltd as a plumbing and heating engineer from August 2005 until 3 May 2011.  In 2011, he brought employment tribunal claims for, among other things, £74,000 worth of unpaid holiday pay that he alleged had accrued over those years.

Pimlico challenged Mr Smith’s employment status on the basis that he was an independent contractor and ultimately, the Supreme Court held that he was a ‘worker’. Therefore, he was entitled to certain rights under the Working Time Regulations 1998 (WTR) and the Employment Rights Act 1996 (ERA).

Tribunal decision

When the holiday pay claim returned to the employment tribunal, it was dismissed on the basis that it was out of time.  His claims should have been brought within three months of the date of the last period of unpaid holiday pay in February 2011.

The tribunal considered that the principles which applied to carrying forward untaken holiday entitlement laid down by the ECJ in King where holiday was unpaid and therefore untaken, did not apply to situations such as those in this case where the leave had been taken but had not been paid.

EAT appeal

The EAT dismissed Mr Smith’s appeal holding as follows:

  1. The tribunal’s conclusion that King did not give Mr Smith the right to carry forward a right to payment for annual leave from year to year was correct. This only applies to leave that hadn’t been taken.
  2. King did not mean that a worker who takes unpaid leave should be considered to have not taken their annual leave under Article 7 of the Directive. It was not possible to say you had been deterred from taking holiday you had actually taken. The ECJ’s focus was on situations where a worker declines to take leave as a result of the uncertainty as to pay. Had the ECJ intended to develop a carry-over right in respect of leave that is taken but unpaid, it could have been expected to say so.
  3. The time limit for claims under Regulation 16 has no provision linking a series of non-payments. Therefore, the relevant time limit for a claim for pay for an unpaid holiday period was three months from the end of that period. Accordingly, Mr Smith’s claim in relation to his holiday pay was out of time.
  4. Mr Smith’s ignorance of the claims available to him at the time did not make it appropriate to extend time for his claim. He knew enough to at least trigger further enquiries (i.e. that he had been on leave and not been paid for it).
  5. Even if Mr Smith’s claims for the deductions in February 2011 had been in time, his claims for earlier deductions would not have been in time as there was a gap of three months or more between deductions. Therefore, they could not be held to form a ‘series of deductions’ under S.23 of the ERA as per Bear Scotland Ltd v Fulton (No.1) [UK EAT / 2014/0047].
  6. Of particular interest to practitioners in this jurisdiction will be the argument Mr Smith made that the EAT should follow the decision of the Northern Ireland Court of Appeal in Chief Constable of Northern Ireland v Agnew (NICA/2019/32) that Bear Scotland led to arbitrary and unfair results. The EAT refused to do so saying Agnew was only of persuasive value as the NICA is not a court of coordinate jurisdiction and the EAT should generally follow its own previous decisions. The EAT went on to note that Agnew is under appeal to the Supreme Court and said it would be undesirable and contrary to legal certainty to introduce an inconsistency in the EAT on the basis of a NICA judgment that may itself shortly be overturned.

Conclusion

This case is likely to be welcomed by employers as it narrows the range of claims that may be made by workers under King to those for leave that was untaken, rather than to claims for leave that was taken but unpaid.  However, the decision may well be appealed as the matter was determined on a very subtle difference between entitlement to take holidays and entitlement to be paid for such holidays. Furthermore, if the Supreme Court upholds the NICA decision in Agnew then Bear Scotland may well be overturned.

This is a very complex area and legal advice should be sought in each particular case.

For more information on holiday pay issues please do not hesitate to contact Ciara Fulton, Partner, Jones Cassidy Brett Solicitors at:  cfulton@jcbsolicitors.co.uk or 028 9064 2290.

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