The recent case of Smith v Pimlico Plumbers Ltd answers this question, which we explore below.

Previous case law confirms that workers are entitled to be paid on termination of employment for any periods of untaken annual leave that have accrued during employment, where the worker has not been able to take such annual leave because the employer would have refused to pay for it. There is no limit on the amount of leave that can be carried over in these circumstances because an employer that does not allow workers to take paid leave must bear the consequences (King v Sash Window Workshop Ltd).

But what is the position where the worker has taken annual leave, but has simply not been paid for it?

In Smith v Pimlico Plumbers Ltd, Mr Smith worked for Pimlico Plumbers as a plumbing and heating engineer for around six years until 3 May 2011. In August 2011 he submitted an Employment Tribunal claim for, among other things, unpaid holiday that had accrued throughout his employment. Although he had been permitted to take annual leave at regular intervals throughout the various annual leave years, and had routinely done so, he had never been paid for it.

The Tribunal dismissed Mr Smith’s holiday pay claim for being out of time. Such claims must be brought within three months of the most recent refusal to pay holiday pay. Based on the facts as pleaded by Mr Smith, the latest occasion on which he had not been paid for holiday was in February 2011. His claim, having been brought in August 2011, was three months out of time.

The Tribunal also considered whether, under the principle set down in the Sash Window case, the Working Time Regulations 1998 should be interpreted to enable Mr Smith to carry over a right to be paid holiday pay from year to year.

However, the Tribunal decided that Mr Smith’s circumstances were distinguishable from the Sash Window case. The Sash Window case dealt with the position whereby a worker does not exercise his or her right to annual leave because his or her employer refuses to pay for it. In these circumstances, such worker must be permitted to carry over and accumulate that leave until termination, at which point they should receive a payment in respect of all untaken leave.

The principle in Sash Window did not apply to a case where the worker has in fact taken leave but not been paid for it. On this basis, notwithstanding that Mr Smith’s claim was out of time, the claim for accrued holiday pay would have failed in any event.

Mr Smith appealed to the Employment Appeal Tribunal who upheld the Employment Tribunal’s original decision. The EAT agreed that the Sash Window claim only applies in respect of leave that has not been taken due to uncertainties as to pay. Mr Smith had taken his leave, he had just not been paid for it. Had it been intended to develop a carry-over right in respect of leave that is taken but unpaid, the European Court of Justice in the Sash Window case would have expressly stated as such.

Workers are, of course, entitled to payment of annual leave so it is likely that, had Mr Smith’s claim been in time he would have been awarded holiday pay in respect of the most recent occurrence of unpaid annual leave (but this would not have extended to historic periods of unpaid leave which occurred more than three months prior to the last incident).

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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