Holiday Pay: Another potential headache!

For those businesses who have categorised individuals as independent contractors and not as Workers (or even employees) another potential headache has emerged.

Remember the Pimlico Plumbers’ case in the Supreme Court? That was the test case brought by Mr Smith which confirmed that he and many, many others are in fact Workers. Well, that was actually a preliminary issue in his original holiday pay claim which went all the way to the Supreme Court.

So Mr Smith got back to his original holiday pay claim. He lost in the tribunal. He lost in the Employment tribunal. Now, he has won in the Court of Appeal.

The Court of Appeal found that if a Worker hasn’t been given the right to take paid holiday at all (because the business didn’t recognise him as a Worker in this case) then that’s a single indivisible right that has never been provided. He may have taken unpaid leave, but the fact remains that he was never given the right he should have had. That failure to give him the right to take paid leave is a continuing failure which gives him a claim right up to the date of termination of contract.

These sorts of claims can prove expensive.

The judgement emphasises that the burden of proof is on the employer to show:

  • It specifically and transparently gave the Worker the opportunity to take paid annual leave; and
  • It informed the Worker the right would be lost at the end of the leave year.

Take away points

  • Get the Worker/Employee/Contractor status right.
  • The case had some useful observations about the importance of looking at EU retained law where it still affects legal rights.
  • There were some interesting points of detail about the way such claims should be brought, meaning that some aspects of such claims could still be defended.
  • Other key cases were considered and there are some far reaching observations which affect both holiday pay claims and claims for unpaid wages generally.



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