Gary Smith is already known for his long-running case against Pimlico Plumbers in which the Supreme Court eventually upheld his claim that he was a worker and not self-employed. However, in the background he was also pursuing a claim against Pimlico Plumbers for holiday pay on the grounds that, because the firm had incorrectly treated him as self-employed during his six years of working for them, he had been denied his right to take paid holiday.
In December 2021, Mr Smith won his holiday pay case in the Court of Appeal (having lost in the Employment Tribunal and EAT) and in doing so established new principles that may affect other employers who use the services of self-employed individuals. The Court held that:
- although he had taken leave whilst working for Pimlico Plumbers, this had been unpaid and so he could still claim statutory holiday pay for up to 4 weeks per year;
- leave for which the employer refuses to pay holiday pay does not count towards the basic 4 weeks’ leave entitlement under the Working Time Regulations and so the “use it or lose it” rule does not apply;
- consequently, 4 weeks of statutory annual leave was deemed to have been carried over each year;
- on termination of his engagement with Pimlico Plumbers, he could claim for all the paid leave he had been denied during his six year engagement with the firm;
- he could bring his claim under the Working Time Regulations, meaning that the two-year backwards looking limitation on claims brought under the Employment Rights Act as unlawful deductions from wages did not apply (strictly it did not apply anyway in this case but the Court heard full arguments on the point in order to resolve conflicting case law on it); and
- when it comes to a “series of deductions” of holiday pay, the Court gave a very strong indication that the length of any time gap between them is not relevant, potentially overruling earlier cases which had held that a three month time gap would break the series.
Consequences for employers
Even if the employer genuinely but mistakenly treats an individual as self-employed and so does not provide paid annual leave, the worker’s rights to holiday pay will accumulate throughout their engagement and can be claimed any time up to 3 months after termination.
It is possible that Pimlico Plumbers could seek to take this case to the Supreme Court, as they did with Mr Smith’s previous case, and we will know more on that in the coming months. In the meantime, the rules regarding holiday pay claims by any individual who can establish worker status have become significantly more favourable.
Mr Smith started his holiday pay claim in 2011, relying partly on EU law and decisions of the European Court of Justice. The effect of Brexit on similar claims is a complex topic and will no doubt be subject to much argument in future cases, but the view of many commentators is that it should not fundamentally affect the right of an individual in a similar position to bring, and win, such a claim.
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