According to the CJEU in King v Sash Window Workshop, a worker who has not taken annual leave because they would not be paid for it is entitled to carry over a right to payment until the end of their employment. The question for the EAT in Smith v Pimlico Plumbers Ltd was whether a similar principle applied where a worker had taken holiday but not been paid for it.
Mr Smith worked for Pimlico Plumbers from 2005 to 2011. He was not paid for any periods of leave because Pimlico claimed he was self-employed. (The Supreme Court eventually decided that he was a worker.) He nonetheless took periods of leave. When his engagement ended, he brought a claim for unpaid holiday pay covering the full period of his engagement. The tribunal rejected his claim because it was out of time. He had not brought the claim within three months of the date on which he should have been paid for leave as required under the Working Time Regulations and the Employment Rights Act 1996.
The EAT upheld the tribunal’s decision. The reasoning in King did not extend to a situation in which a worker had in fact taken leave despite knowing that they would not be paid for it. A worker in Mr Smith’s position, who had taken leave, was not precluded from bringing a claim for pay. If the CJEU had intended to create an additional carry-over right in relation to leave that is taken but unpaid it would have said so expressly.
The EAT’s decision was supported by the fact that:
- The time limits in the Working Time Regulations would otherwise be rendered ineffective – workers could accumulate a right to payment for leave over a number of years without any regard to time limits;
- There would be an inconsistency of approach in relation to time limits between cases of unpaid leave and leave that was partly paid, which would be unsatisfactory; and
- The claimant’s argument created a new right for payment upon termination that goes beyond that envisaged by the Working Time Directive.
The tribunal was therefore correct to find that the normal time limits applied and that Mr Smith’s claims for holiday pay were out of time.