The claimant worked for the respondent as a plumbing and heating engineer from 2005 until 2011.   The respondent maintained that the claimant was self-employed and had no rights as a ‘worker’ under the Working Time Regulations 1998.  The Supreme Court, however, ruled that the claimant was a worker.  This case related to the holiday pay claim that the claimant had initially brought.

The claimant routinely took unpaid holiday at Christmas time, during Summer holidays and on bank holidays.   The last point at which the claimant took leave was from 18th December 2010 to 4th January 2011.  His employment was subsequently terminated in May 2011. The claimant brought a claim for holiday pay under the Working Time Regulations as well as an unauthorised deduction from wages claim.  The Tribunal found that the claim was out of time on the basis that the claim should be brought within three months of the most recent deduction.  The Tribunal and EAT found that the decision in King v Sash Window Workshop only applies to situation when the leave is not taken at all rather than situations where the leave is actually taken.  As a result of this decision, the claimant appealed to the Court of Appeal.

The Court of Appeal found that the decision of the ECJ in King had broader reach and should be regarded as extending to those who have taken the leave but have not been paid.  Article 7 of the Directive outlines that there is a right to paid annual leave for workers.  Any action taken by an employer which deters a worker from taking the leave would then be incompatible with the right to paid leave. It is the employer that has to deal with the consequences of that deterrence.  The Court of Appeal stated that for a worker to lose the right the employer must demonstrate that it gave the worker the opportunity to take paid leave, encouraged it and informed them that the right would be lost if it was not taken. If that has not been done then the right will accumulate until the termination of the contract.   The claim would, however, still have to be taken within three months of the date of termination.  Accordingly, the appeal was allowed.

Interestingly, the Court of Appeal also dealt with the unauthorised deduction from wages claim and agreed with the decision taken in PSNI v Agnew rather than Bear Scotland.  This view is only provisional and obiter but it suggests that the three-month limit between the deductions will not be in place but rather whether there is a sufficient factual link between the deductions will suffice in demonstrating the link for the purposes of a claim.

Practical Lessons

This case provides very useful guidance on recouping holiday pay and the time limits involved.   The Court of Appeal has made it more favourable for claimants by demonstrating that the rights under the Working Time Directive are such that the employer only avoids them by showing they gave the opportunity, encouraged it and notified the worker of the consequences.  This should be taken into account by employers to ensure that they are not met with an unpaid holiday pay claim after the end of the worker’s employment.
https://oldsquare.co.uk/wp-content/uploads/2022/02/APPROVED-JUDGMENT-in-SMITH-v-PIMLICO-LIMITED-LTD-A2.2021.1097.pdf

Previous Case Reviews:

Smith v Pimlico Plumbers Ltd [2021]:
https://www.legal-island.com/articles/uk/case-law/2021/march/smith-v-pimlico-plumbers-ltd-2021/

Pimlico Plumbers Ltd & Anor v Smith [2018]:
https://www.legal-island.com/articles/uk/case-law/2018/june/pimlico-plumbers-ltd--anor-v-smith-2018/

Pimlico Plumbers Ltd and Anor v Gary Smith [2017] EWCA Civ 51:
https://www.legal-island.com/articles/uk/case-law/2017/feb/pimlico-plumbers-and-anor-v-gary-smith-2017/