Right to pay for unpaid leave which was taken does not carry over
Friday 26th March 2021
In Smith v Pimlico Plumbers Ltd, the EAT held that the right to payment for annual leave does not carry over from year to year where the leave itself has been taken, albeit unpaid.
Mr. Smith was engaged as a plumber by Pimlico from August 2005 until May 2011. He subsequently brought several employment related claims. Pimlico considered Mr. Smith to be a self-employed contractor with no entitlement to holiday and challenged his alleged status as a worker. The SC held in 2018 that he satisfied the definition of worker under the ERA 1996. Following this decision, his holiday pay claims under the WTR and for unauthorised deductions were considered by the ET.
To the extent that Mr. Smith had unlawfully been refused holiday pay, the ET held that his claims were out of time having not been brought within three months of the most recent refusal. The ET then considered whether Mr. Smith could rely on the CJEU decision in King v Sash Window Workshop Ltd and carry over from year to year a right to claim payment for unpaid leave which would then be payable on termination.
King established that a worker who does not exercise the right to paid annual leave because their employer refuses to pay for it, must be permitted to carry over and accumulate such leave until termination, and then receive a payment in respect of all untaken leave.
Although Mr. Smith had been permitted to take annual leave and had done so on numerous occasions, his leave had been unpaid. Mr. Smith relying on King, argued that on termination of his contract, he should have received payment in respect of his unpaid annual leave, the right to payment having accumulated, carrying over from one leave year to the next.
The ET held that King did not apply to Mr. Smith’s situation because unlike Mr. King, he had taken annual leave despite Pimlico’s refusal to make payment.
The EAT agreed and also considered whether given King, those who take unpaid leave should be considered to have taken leave at all. Holding that the CJEU’s decision in King did not go this far, the EAT highlighted that the focus was on a worker who declines to take leave because of uncertainties regarding pay.
All information in this update is intended for general guidance only and is not intended to be comprehensive, or to provide legal advice.