Caspar Glyn QC acts in significant Court of Appeal case on holiday pay

Caspar Glyn QC is successful in the Court of Appeal acting for the Appellant in Gary Smith v Pimlico Plumbers.

The Court of Appeal today handed down a significant case on holiday pay. It also expressed a strong obiter view on the vexed ‘series of deductions’ issue with respect to unlawful deductions.

You will remember that the Supreme Court held in Plumbers Pimlico Plumbers Limited and another v Smith [2018] UKSC 29 that Mr Smith was a worker.

The Court of Appeal’s decision concerned Mr Smith’s claims for holiday pay.

Mr Smith was never paid any holiday pay because Pimlico Plumbers wrongly denied that Mr Smith was a worker.

Mr Smith’s holiday pay claim was dismissed by the Employment Tribunal because:

1. Mr Smith had not pleaded a claim for a payment on termination in lieu under regulation 14 WTR 1998;

2. He was outside the 3-month limitation period under regulation 30 WTR (as extended by EC) in respect of his claims for taken, but unpaid leave and UK law could properly split out the right to payment and entitlement to leave;

3. The decision in Bear Scotland meant that there was a gap of more than 3 months between any deduction.

The Court of Appeal held that in respect of Mr Smith’s pre-Brexit claims that:

1. The Tribunal was entitled to decide that Mr Smith had not pleaded a regulation 14 Claim;

2. In circumstances where Mr Smith’s employer disputed his right to holiday pay and refused to remunerate any holiday, Mr Smith could only lose the right to regulation 13 paid annual leave (the four weeks’ Euro leave) if the employer could prove he had actually been given the opportunity to exercise the single right to paid annual leave which is a right to pay and to leave. Pimlico could not discharge the burden on them. Accordingly, the claims for taken but unpaid annual leave accumulated throughout Mr Smith’s employment and crystallised on termination. In Mr Smith’s case this was an accumulation of untaken leave over a period of 6 years;

3. As a result of the Court’s conclusion on (ii) it was not necessary for the Court to make findings on the ‘series of deductions’ issue. However, the Court was invited by the Claimant to do so. It expressed the ‘strong provisional’ obiter view that a series is not ended as a matter of law by a gap of more than 3 months between unlawful deductions.’ The Court’s expressed the view that ‘It is a question of fact and degree, based on the evidence, whether deductions are sufficiently similar or related over time to constitute a “series”.

Consequences:

1. The Court of Appeal applied the ratio of King v Sash Window Workshop [2018] ICR 693 to regulation 13 WTR leave that was taken during Mr Smith’s time as a worker. This decision will have considerable consequences where an employer has denied worker status and not paid any holiday pay. Claims to taken but unpaid leave will accrue throughout employment until the worker is afforded the opportunity to take such leave and will, unless afforded before then, crystallise on termination.

Questions yet to be answered directly but posed by the decision:

1. Where a regulation 14 claim is also pleaded then untaken leave under regulation 13 is claimable under the King decision where the worker’s status is denied and his pay is never remunerated. Smith now joins up the circle for taken unpaid leave.

2. A regulation 13A claim can also be brought as an unlawful deduction. If a claim is made to a Tribunal under regulation 14 and or regulation 16 then Tribunals are likely now to follow the Northern Irish Court of Appeal’s decision in Chief Constable of Police v Agnew [ [2019] IRLR 792 and, depending on the facts likely to find that such claims amount to a series applying that analysis. The effect of the strong provisional view has yet to be determined but certainly at the EAT level it may result in Bear Scotland being reversed and might result in Bear Scotland not being followed by Tribunals.

3. The effect of an employer starting to pay a worker regulation 13 leave following a period of denying a worker’s status and not paying them such leave may not eliminate historic claims which may still carry over unless the burden is discharged.

4. The Court referred, for the first time in domestic law, to the duties of employers in respect of regulation 13 paid annual leave. They include the duties that employers have the burden of showing that they specifically and transparently gave the worker the opportunity to take paid annual leave, encouraged the worker to take paid annual leave and informed the worker that leave would be lost if leave was not taken (Max-Planck-Gesellschaft Zur Förderung Der Wissenschaften EV v Shimizu [2019] 1 CMLR 35). Will those duties which, on the European cases, were applied also to workers who were afforded paid annual leave rights, be applied more widely to all employers? Is this the new duty for all employers? What are the consequences for employers if they do not discharge the burden in respect of regulation 13? Will such a burden be restricted?

5. Mr Smith’s claim was brought when the UK was a full member of the EU. In claims brought after IP day (11pm 31 December 2020) the Charter is not part of domestic law. However, is it likely that per section 5(5) European (Withdrawal) Act 2018 that the principles on which the Court relied under King and Shimizu amount to fundamental rights or principles such that they are retained law?

This case may well have very serious consequences for those who employed workers, denied their status as workers and failed to remunerate their holiday and or failed to ensure that they could take those rights, including the historic rights.

Workers should always ensure that they make clear claims for both taken but unpaid holiday and also regulation 14 leave. Current claims should be reviewed for amendment applications.

The very considerable consequences of this judgment are still being unpacked.

I worked on this case with Michael Ford QC who advanced the submissions on the regulation 14 claim and the series of deductions arguments whilst I argued the carry-over of untaken unpaid leave argument which forms the ratio of the decision.

We led David Stephenson and were instructed by TMP Solicitors.