House of Lords decision in Stringer and Others v Her Majesty’s Revenue and Custom

As we enter into the balmy days of summer and indeed the holiday season, the House of Lords has finally delivered its decision in the long running case of Stringer and Others v Her Majesty’s Revenue and Customs (previously known as Ainsworth v HMRC) on the much vexed topic of a workers entitlement to holiday pay during sick leave.

Following the decision of the European Court of Justice  in January this year (see our Alert!  that

• a worker who is on indefinite sick leave for the whole of an annual leave year is entitled to a period of four weeks’ paid annual leave, despite the fact they are not actually at work;  and
• the right to paid annual leave is carried over at the end of a leave year if the worker was on sick leave for the whole of that year; further he does not lose this entitlement if he was absent on sick leave for part of the year and was still on sick leave when his employment terminates

the House of Lords determined there was only one issue left in dispute between the parties for them to decide. This was:

• could a claim based on an alleged failure to make payments due under Regulations 13, 14 and 16  the Working Time Regulations 1998  be brought by way of a claim for unauthorised deduction from wages under Part II of the Employment Rights Act 1996.

The House of Lords have unanimously decided that it can as ‘holiday pay’ falls within the definition of wages set out under section 27 of the Employment Rights Act.

The decision has implications in relation to the time limits available to potential claimants as the provisions are more generous under the Employment Rights Act (where a claim for unlawful deductions can be bought within three months of the last in a series of deductions) as opposed to a claim under the Regulations (which must be bought within three months beginning with the date on which it is alleged that the exercise of the right under the Regulations should have been permitted, or, if this was not reasonably practicable, within such a further period as the Tribunal considers practicable).

In reaching their decision their Lordships confirmed that in light of the ECJ’s decision all parties involved in the case agreed that the decision of the Court of Appeal should be set aside and the orders of the Employment Appeal Tribunal in Ainsworth be restored.

This means that a worker can accrue and take statutory holiday during sick leave, which will not be welcome news for employers.