The Court of Appeal has ruled that a worker can only lose the right to take paid leave within the holiday year when:
- The employer can show it specifically and transparently gave the worker the opportunity to take paid annual leave;
- The employer encouraged the worker to take paid annual leave;
- The employer informed the worker that the right would be lost at the end of the leave year.
Importantly, if the employer cannot meet the above, the right to paid holiday 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 untaken leave.
This decision relates to a specific case (Smith vs Pimlico Plumbers) so is not necessarily binding in other cases.
However, it should help any umbrella company workers who feel duped out of holiday pay.
Furthermore, surely any decent umbrella will make certain that they do transparently communicate with their workers regarding the possibility of losing paid holiday.
Don’t forget that end-clients have already paid the recruitment agency and/or umbrella company for the annual leave accrued by their workers.
In our opinion, hiding the fact that workers might lose paid holiday in contractual small print without any follow up proactive communication is just wrong!! And this judgement seems to agree with us.