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Carrying forward annual leave: Can claims be made for unpaid but taken holiday?

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Carrying forward annual leave: Can claims be made for unpaid but taken holiday?

Chris Dobbs, solicitor in Frettens' Employment Team, looks at the outcome of a recent case where clarity was provided for holiday pay claims for unpaid but taken holiday. He goes on to look at whether such holiday can be carried forward.

Can a worker make a claim for unpaid holiday?

In 2017, in the case of King v Sash Windows, the CJEU established that a worker can carry over unlimited annual leave which they have been prevented from taking because the employer refuses to pay for it.  

The CJEU said domestic time limits for bringing such a claim – for example, our 3-month time limit to bring an employment claim for unpaid holiday under the Working Time Regulations 1998 or unlawful deduction from wages – should not prevent workers from exercising important EU rights.

Can a worker carry forward taken but unpaid for holiday?

In Smith v Pimlico Plumbers, the EAT has looked at whether a worker can carry forward holiday that he has taken, but not been paid for, to future years.

Mr Smith worked for Pimlico Plumbers as a plumbing and heating engineer. The business maintained that he and other Pimlico Plumbers were self-employed and not entitled to paid holiday. Mr Smith took periods of unpaid leave between 2005 and 2011.

Who can claim for unpaid holiday pay?

He stopped working for Pimlico Plumbers in 2011 and brought a claim for unpaid holiday pay. In 2018, in a ground-breaking judgment for the gig economy, the Supreme Court decided that Mr Smith and other Pimlico Plumbers were workers, not self-employed.

You can find some related 'defining workers' and 'worker rights' articles here, here and here (link to s44 extension to workers when on site).

How far back can holiday pay claims be made?

Due to Mr Smith and other Pimilico Plumbers being 'workers', they were entitled to paid holiday. However, an employment tribunal went on to dismiss Mr Smith’s holiday pay claim because it had been brought out of time.

They did not believe that King entitled Mr Smith to ‘carry over’ a right to payment for unpaid annual leave that had already been taken.

Can you claim holiday pay for untaken leave?

The EAT agreed. King was about carry over and payment in lieu of accrued but untaken holiday, not holiday that had been taken but unpaid.

Mr Smith’s remedy – for holiday which had been taken but unpaid – was a holiday pay or unlawful deduction from wages claim, rather than carry over of annual leave that had already been taken.

Mr Smith’s last period of unpaid holiday was January 2011. He should have been paid for that in February 2011. Therefore a claim should have been lodged in May 2011 at the latest.

When Mr Smith lodged his claim in August 2011, it was too late. The EAT also confirmed that Bear Scotland - the case which said that a gap more than 3 months in a series of deductions would ‘break the chain’, meaning earlier deductions would be out of time - was still good law.

Holiday claims: Advice for employers

This case ends a long running saga for Mr Smith and his personal holiday claim, although his litigation more generally has had an enormous impact on wider workers’ rights.

Employers will welcome the clarity that claims for unpaid but taken holiday cannot be carried forward in the same way as that which is untaken.

The holiday pay saga continues at pace though. The case of Agnew – which decided, contrary to Bear Scotland, that gaps of more than 3 months in a series of holiday pay deductions may not be fatal – is going to the Supreme Court in June.

This is another issue which employers hope will be put to bed in summer – in their favour.

An Employment Solicitor's View

Chris Dobbs says: “Bear Scotland remains good law in England and Wales unless and until the principles are overturned in the Agnew case. That decision will be binding on all UK courts. For now, workers do not have a carry-over right in respect of leave that is taken but unpaid.

For those eligible to claim, a gap of three months or more between periods of unpaid holiday breaks the chain in a series of deductions and they must still bring a claim in accordance with usual Tribunal rules.

Clarity, if it comes, on this point will be welcome for employees and employers alike so that there is uniformity across the UK on this important point. Whichever way the Supreme Court goes, employers should continue to be mindful of employment status issues where a newly determined worker may have paid entitlements.”

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