Holiday Pay

Can a worker carry over leave that has been taken, but not paid, because an employer did not recognise they were a worker?

Yes, held the Court of Appeal in?Smith v Pimlico Plumbers Ltd.

Mr Smith worked for Pimlico Plumbers in what was originally described in his contract as?"an independent contractor of the Company, in business on your own account". He successfully argued that he was a worker in the employment tribunal; a decision that was upheld on appeal to the Supreme Court.

Having succeeded in his worker status claim, Mr Smith sought repayment of the 4 weeks' leave required by the Working Time Directive carried over each year until he stopped working for Pimlico Plumbers. The tribunal and EAT decided that he could not rely on the case of?King v Sash Windows?as it only applied to leave which had never been taken at all.

Lady Justice Simler, giving the only substantial judgment, reversed that decision, holding:

"The language of article 7(1) [of the Working Time Directive], article 31 of the Charter [of Fundamental Rights of the EU], and King, establishes that the single composite right which is protected is the right to "paid annual leave"?...If a worker takes unpaid leave when the employer disputes the right and refuses to pay for the leave, the worker is not exercising the right...[T]o lose it, the worker must actually have had the opportunity to exercise the right conferred by the [Working Time Directive]. A worker can only lose the right to take leave at the end of the leave year (in a case where the right is disputed and the employer refuses to remunerate it) when the employer can meet the burden of showing it specifically and transparently gave the worker the opportunity to take paid annual leave, encouraged the worker to take paid annual leave and informed the worker that the right would be lost at the end of the leave year. If the employer cannot meet that burden, the right does not lapse but carries over and accumulates until termination of the contract, at which point the worker is entitled to a payment in respect of the untaken leave."

In non-binding comments, Lady Justice Simler also explained that her strong provisional view was that the case of?Bear Scotland v Fulton?was wrongly decided and should not be followed.

Thanks to?Matthew Jackson?of Albion Chambers for preparing this case summary.