No right to carry-over payment for holiday which was taken but unpaid

Does an employee/worker have the right to payment for carry over holiday where the leave itself has been taken, albeit unpaid?

The Facts

This is the latest appeal arising from the dispute about the employment relationship between Mr Smith, the Claimant and Pimlico Plumbers, the Respondent.

The Claimant worked for the Respondent from 2005 to 2011 as a plumbing and heating engineer. The Respondent considered the Claimant a self-employed independent contractor with no entitlement to paid annual leave. He took periods of unpaid leave but received no holiday pay. In 2011 the Claimant was suspended which he regarded as a fundamental breach and terminated his contract of employment.

The Claimant subsequently issued several claims in the Employment Tribunal (ET), including a claim for holiday pay. In 2018, the Claimant won a landmark legal battle against the Respondent entitling him to worker rights to include paid holiday and national minimum wage.  As a result of this victory the Claimant was able to continue to pursue his holiday pay claim against the Respondent in which he claimed that the last occasion on which he had not been paid for holiday was February 2011 some five months before he issued the claim.

The ET dismissed the Claimant’s holiday pay claim as out of time as a claim for arrears of pay should usually be brought within three months of the last deduction. The Claimant appealed arguing that the ET had erred in its application of King v Sash Window Workshop (King) in determining the claim was out of time.

The decision in King held that 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.

The EAT in agreement with the ET considered that the decision in King was not concerned with leave taken, but not paid for, but concerned accrued leave that was not taken because the lack of payment had deterred King from taking any leave. The ET and EAT agreed that the two sets of facts were fundamentally different. Unlike the circumstances in King, the Claimant was able to take periods of leave benefitting from periods of rest and relaxation, albeit these were unpaid.

The EAT concluded that the ET had not erred in law in their interpretation of King. The Claimant had failed to submit his claims within the primary time limits and the claim for holiday pay was dismissed as being out of time.  

Points to take away from the case

This case narrows the range of claims that may be made by workers under King to those claims for leave that are untaken, rather than to claims for leave that are taken but unpaid. Here the Claimant was not prevented from exercising his rights under the WTR to take time off to relax and did so albeit unpaid. It is likely that this decision may well be appealed.

It is important to note that this case serves as a reminder to ensure claims are brought within the strict time limits.