A long long time ago, Mr Smith brought a claim for worker status against Pimlico Plumbers Limited. He went all the way to the Supreme Court to get a judgement that he was a worker. Having established that he was a worker Mr Smith then made a claim for 4 weeks holiday pay for each year that he worked at Pimlico Plumbers. The tribunal and EAT rejected his claim on the basis that he was unable to rely on the case law established in King v Sash Windows (of being able to carry over leave year on year) because this did not apply to leave which had been taken but for which he had not been paid.
At the Court of Appeal, Lady Justice Simler reversed that decision, setting out that
The “single composite right which is protected is the right to “paid annual leave”… 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. A worker can only lose the right to take leave at the end of the leave year… 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.
Lady Justice Simler added in non-binding comments, made because she was urged by counsel for Mr Smith to deal with the conflicting authorities that currently exist in relation to this point, that her provisional view was that the Bear Scotland case was wrongly decided and so it would be unsafe to rely on there being a three month break between unlawful deductions (those deductions being the underpayment of holiday pay) to break a chain or series of deductions and prevent a claim. Her comments on this are at para 91 of the judgement for any holiday-pay obsessed readers!