Earlier this year, the European Court of Justice reported its decision in Stringer and ors v HM Revenue and Customs. It held that workers on long-term sick leave are entitled to paid annual leave despite not being able to take it. However, this ruling left unanswered the issue of whether a claim for unpaid holiday pay must be brought under the Working Time Regulations 1998 (WTR), or whether it can be brought as an unlawful deduction from wages claim under the Employment Rights Act 1996 (ERA). This issue was considered by the House of Lords.

Claims under the WTR have to be brought within three months of the relevant holiday, whereas a claim under the ERA has a more advantageous time limit for workers and can be brought for the whole series of deductions provided it is brought within three months of the last in the series. The Revenue accepted that it was obliged under the WTR to pay a sum in respect of unpaid holiday, but argued that it had not made a deduction from ‘wages’ within the meaning of the ERA and therefore the appropriate remedy was under the WTR.

The House of Lords held that claims for non-payment of statutory holiday pay could be brought as an unlawful deduction from wages claim because statutory holiday payments do fall within the definition of ‘wages’. However, the ruling did not address some important questions, including whether workers on sickness absence can be paid in lieu of accrued but untaken holiday, as the WTR currently states that payment in lieu can only be made on termination of employment.

HM Revenue and Customs v Stringer and ors