Gary Smith, who worked for Pimlico Plumbers between 2005 and 2011, took his case to the highest court after a long-running dispute with the company, which has seen the case elevated to national news status. (See Shout99's articles here.
The decision has sent big waves through the world of HR and employment law and has been cited as 'one of the most significant recent rulings in regards to workers rights and their entitlement to paid leave'.
Joanna Alexiou from Mackrell.Solicitors said: "Employers have to grapple with the ever-changing rules around contractors and self-employed workers over the last few years, especially with IR35 and prior to that the various court cases surrounding Uber and Deliveroo.
"This latest decision comes after a case that has rumbled on for more than 10 years and adds further confusion to the role and rights of freelancers and similar workers.
"As with most cases, the judge has focused on the specific details of the case, but the finding definitely has wider implications for those engaging with self-employed contractors.
"Perhaps what is most significant about this case is that the judgment found that where an employer cannot evidence that a worker has specifically been told that they are losing their entitlement to paid leave at the end of the year, then the right does not lapse.
"Instead, it is carried over and accumulates until the right is removed or the contract ends, at which point the worker is entitled to a payment in respect of all of the untaken leave. Where there is a situation where an employer disputes annual leave rights and where this leave is not paid over a number of consecutive periods, rules that prevent the worker from carrying over the accumulated leave until termination are disallowed.
"A worker can only lose the right to take the leave at the end of a leave year (where the employer disputes this) where an employer has been transparent about their allowance and encouraged them to take leave and informed the worker that if they do not, their right would lapse at the end of the leave year.
"What this means is that other self-employed workers who have found themselves in a similar position may be able to make a similar claim. This decision only applies to the 4 weeks’ leave under the Working Time Directive and not the additional 1.6 week’s under UK law.
"This decision also removes the previous two year backstop for recovery of unlawful deduction of wages where an individual is not paid for annual leave. This is as long as the individual presents their claim within three months from their termination of employment date.
"Employers need to review their policies in regards to self-employed contractors and look at present and historic contracts and arrangements to make sure they are not open to a similar claim as this development could have a large ripple effect on the gig economy."
Further IR35 information
For more information about all aspects of IR35, including the controversial IR35 reforms see Shout99's News on IR35 section.
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Susie Hughes © Shout99 2012