The facts of the case

The Supreme Court had previously held in 2018 that Mr Smith was a ‘worker’ for employment law purposes meaning that, amongst other things, he was entitled to paid annual leave. This most recent decision focuses on whether Mr Smith had the right to claim payment for leave which he took whilst engaged by Pimlico Plumbers.

Mr Smith took numerous periods of unpaid leave whilst working for Pimlico Plumbers, but he didn’t file a claim for payment at the time.However, when his engagement with Pimlico Plumbers was terminated, he put in a claim for accrued holiday pay over the entire period he worked for them.

Pimlico Plumbers accepted that, as a worker, Mr Smith was entitled to paid holiday leave. However, they argued that he had acted too late to enforce his rights, and could not carry over his right to paid annual leave in this way. That argument was successful in the lower courts, but has now been overturned by the Court of Appeal.

The Court’s reasoning

A key area of focus by the Court of Appeal was whether an earlier decision of the EU Courts in King v Sash Window Workshop (‘King’) was relevant in the case of Mr Smith.

Although King related to a situation where a worker had not taken leave (due to the lack of pay), the Court of Appeal held that the principles it set out applied equally in cases such as the current one where the worker took unpaid leave. It was clear that the right to take leave, and to be paid for it, are two aspects of a single right, and not distinct and separate rights.

There is therefore no need to distinguish between cases in which a worker does not take leave at all, and those where the worker takes leave but is not paid for it. In both cases, the worker is prevented from exercising their right to take paid annual leave due to circumstances beyond their control. Where this occurs over a number of consecutive periods, employment law states that the worker is entitled to carry over and accumulate the leave until termination of their contract.

Applying this to Mr Smith’s individual circumstances, the fact that he took unpaid leave did not discharge Pimlico Plumbers’ obligation to provide paid annual leave. Since he could only lose the right to paid annual leave if he actually had the opportunity to exercise it, his rights accumulated and crystallised on termination. He was therefore entitled to the claim he had made.

Wider ramifications?

Employment status continues to be a hot topic for both tax and employment law purposes. As previously reported in Employer Focus, it can be an issue for occupations ranging from football referees to Uber drivers.

The Court of Appeal’s decision will no doubt be welcomed by Mr Smith and other former Pimlico Plumbers workers, but it is also likely to have wider implications. In particular, any business that has previously denied individuals holiday pay after incorrectly assuming they were not workers could face similar claims for accrued pay.

It is of course also possible that we have not heard the end of the story, as Pimlico Plumbers could also look to appeal the decision to the Supreme Court.