Holiday accrual awarded to worker in landmark ruling

A worker who took unpaid leave because his employer did not believe he was entitled to holiday pay has been allowed to make a claim for his statutory holiday pay entitlement for the duration of his employment.  This case related to someone that the business wrongly regarded as a contractor. It was determined that he had “worker” status and was therefore entitled to accrue holidays.

Overturning a previous judgment from the Employment Appeal Tribunal (EAT), against Pimlico Plumbers, the Court of Appeal found that workers can only lose the right to roll over paid leave if their employer has been transparent about their allowance and encouraged them to take leave.

The ruling confirmed that the employer must “meet the burden of showing [that] it 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 the right would be lost at the end of the leave year.

It went on to state that “If the employer cannot meet that burden, the right [to paid leave] does not lapse [at the end of the year] but carries over and accumulates until termination of the contract.”

This decision also removes the two-year limit for recovery of unlawful deduction from wages where an individual is denied a right to paid annual leave, provided that the claim is brought within three months of termination. This means that employers no longer have the backstop of believing that their exposure could be limited to just two years. It is therefore important that businesses identify all workers who may be entitled to holidays (which may include “contractors” who may be legally regarded as a worker) and ensure that the holiday is provided to them.  Ignorance is not a defence in this situation.

If you are concerned that you may have contractors who could be regarded as workers, it is important to take advice in order that holiday entitlement does not accrue indefinitely!

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