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Holidays: carry-over of right to payment
Smith v Pimlico Plumbers Ltd
There is no right to carry over annual leave where annual leave was taken but was unpaid and therefore no right to payment for that annual leave on termination.
Many will recall Mr Smith’s battle with Pimlico Plumbers (PP) which ended up with the Supreme Court ruling that he was a ‘worker’ for the purposes of the Working Time Regulations 1998 (WTR) and the Employment Rights Act 1996 (ERA) and could therefore pursue his holiday claims against PP. Mr Smith’s holiday pay claim then returned to the employment tribunal. During his time with PP he had regularly taken holidays but had not been paid for them. His last period of holiday was between 18 December 2010 and 4 January 2011. He left PP on 5 May 2011 and began proceedings on 1 August 2011. The tribunal held that Mr Smith’s holiday claim had been brought outside the statutory time limit (three months) so his claims for pay in respect of holidays taken (under WTR, reg.16 and ERA, s. 13) were dismissed.
The appeal was dismissed.
Mr Smith’s case hinged on the ECJ case of King v Sash Windows. Mr King had been deterred from taking holiday because his employer didn’t pay holiday pay. This left Mr King without an effective remedy under the WTR – he had not requested and been refused holiday, so couldn’t claim for breach of WTR, reg. 13 and he had not been underpaid for holiday he did take, so couldn’t claim for breach of WTR, reg. 16. As a result, the ECJ held that the WTR was incompatible with EU law. Mr King was entitled to carry over all the leave that he was deterred from taking and was entitled to a payment in respect of it on the termination of his employment.
Mr Smith argued that Sash Windows did not only apply to cases where a worker is deterred from taking leave because an employer does not pay for holiday. Instead, Mr Smith said that the effect of the case was that any worker who is not paid for their holiday should be entitled to carry over the entitlement to paid annual leave, even if the worker does in fact take the holiday.
The EAT, after an exhaustive analysis of Sash Windows, did not agree. It held that the ECJ’s decision as to the right to carry over and the right to a payment in lieu on termination only apply in respect of leave that has not been taken. Mr Smith could have exercised his right to claim payment for the leave he took, pursuant to WTR, reg. 16. Therefore, unlike Mr King, Mr Smith had an effective remedy under the WTR. Mr Smith failed to exercise this remedy in accordance with the relevant time limits, and the EAT found that there is nothing in the Sash Windows judgment which indicates that those time limits should be disapplied.
Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2021/0211_19_1703.html
It was unfortunate that Sash Windows was settled before it was heard in the UK but the EAT has clearly distinguished this case from the Sash Windows case in any event. In Sash Windows the claimant did not take holiday because he thought he would not get paid for it. Therefore, the entitlement was rolled over into the next year and payment should have been made for it on termination. In this case Mr Smith took leave but was just not paid for it. Therefore, his only claim was for payment for that taken leave in accordance with the strict time limits imposed by legislation and he could not carry the leave over into the next holiday year, because he had already taken it.