HM Revenue & Customs v Stringer and others [2009]

19 June 2009
 

We report further on the issue of holiday accrual.

Last week the House of Lords gave its judgment in the case of HM Revenue & Customs v Stringer and Others. This follows an earlier European Court of Justice (ECJ) case and addressed the thorny issue of accrued holiday leave during long-term absence on which we have commented previously. Some clarity has been provided but unfortunately areas of debate remain.

The primary ground of appeal was whether claims for unpaid holiday can only be claimed under the Working Time Regulations (1998) (WTR); these have a 3 month time limit from the date of the deduction (with no provision for a “series of deductions”), or whether they can also be claimed under the deduction from wages provisions of the Employment Rights Act (1996) (ERA). This is not an academic distinction. Unlawful deductions from wages may be recovered if they are part of a series of deductions and so non-payment for holidays may go back for years. The Lords ruled that they can be pursued as deductions under the ERA.

The result of this decision is that workers might be able to recover holiday pay going back several years. Many staff may have claims relating to previous years; whether such claims are made will, no doubt, be determined by individual circumstances.

You may recall that another issue in the Stringer litigation concerned the relationship between statutory annual leave and long-term sick leave. In the light of the ECJ's judgment in this case; that when a worker is absent on sick leave their entitlement to paid holiday under the WTR continues (which we commented upon on 22 January), HMRC declined to pursue its arguments on this matter before the House of Lords. It follows that, not only do workers continue to accrue and are entitled to take statutory annual leave whilst off sick, they are also entitled to be paid in respect of such leave, even where they have exhausted their statutory and contractual sick pay entitlements. This unfortunately conflicts with the provisions of the WTR that do not permit untaken holiday entitlement to be carried over. This incongruity remains unaddressed.

Comment
These issues are complex and more litigation in this area is likely in light of the fact that the Lords did not have to address all of the issues remaining following the ECJ’s ruling.

Holiday pay seems destined to remain a difficult area and remember that this applies to workers and not only employees.