A heating engineer who claimed he was owed holiday pay (denied to him because of his self-employed status) has been successful in the Court of Appeal. On Monday, a Supreme Court judge overturned a previous ruling that his claim was out of time.
Pimlico Plumbers is a London-based plumbing firm established by Charlie Mullins. Mullins started the company from a basement of an estate agent in Pimlico in 1979. In September 2021, Pimlico Plumbers was sold to US home services group Neighborly. This deal saw him offload his 90% stake in the group and is expected to be worth between £125m and £145m, according to the Financial Times. His son, Charlie, retains a stake of about 10%, and continues his role as chief executive. The company currently makes nearly £50.7m in revenue a year and employs more than 400 workers.
Gary Smith, who worked for the company between 2005 and 2011, claimed he was owed holiday pay by the company after the Supreme Court ruled that he was a worker and not self-employed. However, an Employment Appeal Tribunal last year ruled that his claim was not made quickly enough.
The long-running case began back in 2011, when Smith initiated an Employment Tribunal case against the company, claiming holiday pay. On the 10th of February 2017, in the Court of Appeal, Smith was found to have “worker” status for the purposes of various employment protection rights. Pimlico Plumbers argued the plumber was an independent contractor, but the Court of Appeal determined he was a worker. The Supreme Court granted Pimlico permission to appeal, which, following a hearing on 20 and 21 February 2018, was unanimously dismissed.
Despite that judgement, it appeared Smith had been unsuccessful in claiming back-dated holiday pay. Smith had been seeking £74,000 in compensation for holiday pay relating to his time working for the plumbing firm between 2005 and 2011. In March 2021, an Employment Appeal Tribunal upheld the Croydon employment tribunal’s 2019 ruling that Smith had not filed his claim for backdated holiday pay quickly enough. Under tribunal rules, he should have made his claim for missed pay within three months of each holiday period, dating back to 2005.
The case has been viewed as significant in terms of the hotly-debated status of workers, especially in the gig economy, where bogus, self-employment – often described as independent contractors – is rife. Entitlement to holiday pay is one aspect of this, as is the stipulation that Smith’s claim was out of date, made by the Employment Tribunal in 2019 and confirmed by the Employment Appeal Tribunal. In court on Monday, Lady Justice Simler reversed that decision, explaining:
“If a worker takes unpaid leave when the employer disputes the right and refuses to pay for the leave, the worker is not exercising the right. Although domestic legislation can provide for the loss of the right at the end of each leave year, to lose it, the worker must actually have had the opportunity to exercise the right conferred by the Working Time Directive.”
In a blog-post further explaining the decision, Michael Ford QC, barrister at Old Square Chambers, wrote:
“The judgment is of importance to all workers denied the right to any paid annual leave, usually on the basis that they are not ‘workers’, and to all claims for unlawful deductions from wages, not only those brought in relation to under-paid holiday pay under the Working Time Regulations.
“The implications of the judgment for ‘gig’ workers – to use the hackneyed phrase – is huge. Already, such workers could rely on King to carry over the untaken portion of four weeks’ leave each year and obtain full compensation for it on termination; now, according to the Court of Appeal, they can carry over-taken leave as well.”
In her summing up, Lady Justice Simler said:
“A claim to payment for all the leave which Mr Smith took but for which he was not paid in breach of his right to paid annual leave was inherent in Mr Smith’s pleaded case.
It follows that the tribunals below erred in law in deciding otherwise. Moreover, this claim was in time because he was denied the opportunity to exercise the right to paid annual leave throughout his engagement with the respondent.
The respondent could not discharge the relevant burden. The right did not therefore lapse but carried over and accumulated until termination of the contract, at which point Mr Smith was and remains entitled to a payment in respect of the unpaid leave.”