Holiday Pay - House of Lords decision

[Thanks to Michael Ford of Old Square Chambers, instructed by Thompsons on behalf of the employees, for preparing this summary]

The House of Lords has today decided in favour of the workers in the long-running litigation in Stringer v HMRC (sometimes referred to as Ainsworth v HMRC), overturning the Court of Appeal.

Their Lordships have now unanimously held that a claim for (i) unpaid holiday under regulations 13 and 16 of the Working Time Regulations or (ii) a payment on termination under regulation 14 can be pursued as unauthorised deduction claims as well as under the Working Time Regulations. The important practical effect is that a worker can take advantage of the more generous time limits which apply to unlawful deduction claims. A claim for unlawful deduction from wages can be brought within three months of the last in a series of deductions, so allowing a claim to go back more than three months if the underpayments form part of a series.

The ECJ had previously decided that a member state (i) could allow a worker off sick to take annual leave; or (ii) could prevent a worker taking leave while off sick but - and this is the critical point - only if the worker has the right to carry over annual leave to subsequent leave years if he or she was unable to take leave because of illness. It also held that compensation payments on termination should not be discounted on account of sickness.