Holiday pay appeal opens doors for gig workers
Forty-five medical couriers have been given the go ahead to pursue a claim for unlimited backdated holiday by the Employment Appeal Tribunal.
The appeal rests on whether the couriers should be classed as workers or as self-employed. The result could have implications for future cases, by clarifying where the boundary lies between the two.
The couriers’ original case, raised in 2018, argued the working relationship with their engager, medical lab The Doctors Laboratory (TDL), made them workers.
Their claim was unsuccessful, but the couriers were granted two years’ backdated holiday pay.
The couriers’ appeal was delayed until the judgment from the landmark Smith v. Pimlico Plumbers case was released in 2021.
The case determined that if a claim for holiday pay was made by the worker within three months of the termination of an engagement, the worker is entitled to retrospective unpaid leave.
The Employment Appeal Tribunal upheld the Employment Tribunal’s ruling that worker Gary Smith had not filed his claim for backdated holiday pay quickly enough. However, the Court of Appeal reversed this decision. Lady Justice Simler ruled:
“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.”
She continued:
“A worker can only lose the right to take leave at the end of the leave year (in a case where the right is disputed and the employer refuses to remunerate it) when the employer can meet the burden of showing 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. If the employer cannot meet that burden, the right does not lapse but carries over and accumulates until termination of the contract, at which point the worker is entitled to a payment in respect of the untaken leave.”
Barrister Michael Ford QC, who acted for Gary Smith on the appeal, spoke of the implications of the finding for other workers and employers. He said:
“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 WTR.
“It is the means of reaching this result that matters. In the lead judgment, Simler LJ (with whom King LJ and Elisabeth Laing LJ agreed) held that the principles of Court of Justice’s judgment in King v. Sash Window (2018), allowing the indefinite carry over and accumulation of the untaken part of the four weeks’ of ‘Euro-leave’ due to those denied worker status in respect of their leave each year, were equally applicable to any taken but unpaid ‘Euro’ leave. As a consequence, whenever Gary Smith took leave but wasn’t paid for it, up to four weeks of that unpaid leave in respect of each leave year carried forward into the subsequent leave years and accumulated until termination of his employment. When his employment ended, a payment was due to him for all that carried over, unpaid leave, based on his normal remuneration while working. The exact amount will be determined when the case returns to the Tribunal on remedy.
“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. Moreover, and in contrast to the position of workers off sick, there is no temporal restriction on the period of carry over. It means, in essence, that individuals who were denied worker status can recover, without limit, compensation for all their four weeks’ ‘Euro’ leave – taken or untaken – every year for the duration of their employment. Liability for all that leave will crystallise on termination. Tribunals will no longer have to wrestle with the nice legal and factual issue of how much ‘leave’ a worker, who had no obligation to work and no entitlement to holiday, took or didn’t take in past years. As a result, the financial costs to employers of wrongly denying worker status are now potentially very high indeed.”
Over the last few years there has been considerable blurring of the lines between different types of employment status, and the definition of 'employee' and 'worker' differs slightly from one area of legislation to another. The growth of the ‘gig economy’ – made up of short-term contracts and flexible working as opposed to long-term contracts – has only added to the confusion. Employment Tribunals sometimes agree that workers are employees, and therefore entitled to benefits, and vice versa.
Returning to the medical couriers’ case, Rebecca Seeley Harris, founder of legal firm Re:Legal Consulting, told HR Magazine the couriers’ case could mean a leap forward for workers’ rights if successful. She said:
“This is the first case to my knowledge which has been given consent as a result of the court of appeal’s judgement in Smith v. Pimlico Plumbers regarding holiday pay. If the fresh Employment Tribunal decides that the couriers are indeed ‘workers’ and deserve employment rights, then this case could open the door to many others in the gig economy.”
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