01 May 2022

In each issue, Nicola Mullineux, senior employment specialist for Peninsula, explores the interesting outcomes of three different employment law cases

Paid holiday entitlement and correct employment status

The recent case that passed through the employment tribunal (ET) system involving Smith v Pimlico Plumbers Ltd is the latest in a long-standing saga. The parties appeared at the UK Supreme Court in 2018 to determine the employment status of those engaged by Pimlico Plumbers, after a claim journey spanning seven years progressed through the lower tribunals. The respondent believed anyone who provided services did so on a self-employed basis, however, it was later confirmed by the Supreme Court they were entitled to worker status.

This ruling raised new opportunities for workers to make further claims against the organisation for entitlements they should have been given over the course of their employment. This includes the right for workers to be given at least the minimum paid annual leave entitlement of 5.6 weeks.

Smith had taken annual leave while he was engaged by the company but wasn’t, under self-employed status, entitled to any pay for his time off. Following the ruling that he should have had worker status, he pursued a separate claim through the ET for pay for this holiday time.

The ET dismissed the claim on the principle that it was brought almost three months out of time. This date was based on the last date he should have been paid for his holiday (5 February 2011), as opposed to the date his employment contract ended (3 May 2011). Smith relied on previous case law (King v Sash Window Workshop) to determine the time limit. However, the ET rejected the comparison, since, in the King case, the worker had not taken any annual leave at all.

Smith appealed to the employment appeal tribunal (EAT), who also dismissed his claim, finding that the tribunal had not erred in its interpretation of the law and previous case law. The EAT agreed the King case wasn’t concerned with leave that was taken but unpaid, as Smith’s case was.

Unsatisfied with the outcome, Smith appealed again to the Court of Appeal (CoA). This time, his claim succeeded. It was found that the claim was for the breach of Smith’s statutory entitlement as a worker to four weeks paid annual leave under the European Working Time Directive (EWTD). Since Pimlico had previously regarded him as a self-employed contractor, they failed to acknowledge this statutory entitlement. As such, this right to paid annual leave accumulated and carried over throughout the duration of his employment, meaning he was entitled to payment for all accrued but unpaid EWTD annual leave at the point of termination.

This judgement could bring significant liabilities for UK employers, especially if they have engaged individuals under the wrong employment status and denied them paid annual leave. As such, the case highlights the importance of making sure the correct employment status applies and to remind, encourage and facilitate staff to utilise their holiday entitlement, and inform them it may be lost if they don’t.


Agency workers not entitled to apply for internal roles

Agency workers’ rights to apply and be considered for internal positions have been questioned in recent months, with a case going as far as the CoA to provide clarity on workers’ entitlements and employers’ obligations. The Agency Worker Regulations (2010) are based on law set from the European Union in the Temporary Agency Workers Directive. They ensure the fair treatment of agency workers from all associated parties, including the agency and the end-user.

The Regulations set out, among others, two key provisions:

1.) the right for an agency worker, during an assignment, to be informed by the hirer of any relevant vacant posts with the hirer, and to give them the same opportunity as a comparable internal worker to find permanent employment with that hirer

2.) the right for agency workers to be given the same basic working and employment conditions for doing the same job as anyone recruited directly by the hirer.

In the case of Kocur v Angard Staffing Solutions, an agency supplied workers to the Royal Mail. Two agency workers raised a claim to the ET alleging the organisation had breached Agency Worker Regulations. This was after they were informed they weren’t eligible to apply for internal vacancies, unless and until, they were advertised externally. The ET agreed with the employee and upheld the breach claim. However, the respondent appealed this decision, arguing the tribunal had clearly misinterpreted the wording of the Regulations in question.

The case was therefore passed to the EAT. The EAT agreed with the respondent, holding that while agency workers do have the right to be informed about any internal job vacancies with the end-user, they have no rights or entitlements to apply for and be considered for them, in the same way a direct recruit would be. The key aim of the regulation was to allow agency workers to be given the same information as comparable internal workers, which puts them in a more advantageous position than external job applicants. Subsequently, it was deemed this information was valuable, even if the hirer refused them permission to apply for the role.

The claimant then appealed the case to the CoA, arguing the right to be advised of internal vacancies with the hirer implicitly included the right to also apply for these jobs. This concept was rejected. The CoA referenced the Directive from which the Regulations are based on, and concluded that, when the Directive was made, there was no indication it intended to treat permanent and temporary workers the same in every single aspect. Doing so would take away the flexibility employers enjoyed from engaging agency staff. Instead, the Directive highlights that temporary agency workers aren’t comparable to direct recruits in all respects.

Since the judgement was made from the CoA, its outcome is binding, meaning employers should adhere to the decision. This is probably welcomed by employers, who won’t have to worry about having to interview, or consider an application from, an agency worker for internal vacancies.


Suggesting retirement leads to discrimination

The ET found an older employee with dementia was constructively dismissed, discriminated against and humiliated because of her condition. She was repeatedly asked if she wanted to retire. In addition, she wasn’t offered an occupational health referral prior to her return to work after shielding.

In this case (Hutchinson v Asda Stores Ltd), the claimant had worked in an Asda store for 20 years. She first began displaying signs of dementia in 2017, and by 2019, her deterioration was noticed by her colleagues. By 2020, the claimant had stopped driving to work and started getting the bus; her doctor had arranged a memory test for her. The claimant didn’t disclose that she was suffering from dementia to anyone at Asda. On one occasion, she walked to work after failing to find the bus stop. The store manager suggested she arrange an occupational health appointment, or contact her daughter, but the claimant refused both actions. The same store manager also discussed retirement with the claimant at this time.

Following government advice that those over 70 should shield, the claimant began 12 weeks of isolation in March 2020. Asda were supportive of her during this time, but she began to feel unwanted, after another manager repeatedly asked if she wanted to retire. On her return from shielding, issues caused by her dementia continued, and concerns over her performance were noted. This ultimately led to a meeting between the claimant and her manager, where she was asked if there was any support that could be given, or if she wanted to speak to occupational health. Following this conversation, the claimant left the store and was signed off sick, never to return to work.

The tribunal was critical of the approach taken by Asda in approaching the matter. While it was accepted the situation was made more difficult by the claimant being reluctant to accept assistance, it should have been obvious she was struggling with significant health issues and therefore required a more sensitive approach. The previous conversations around retirement meant that when occupational health was suggested on the claimant’s return to work, it created an unwanted and humiliating environment for the claimant, related to her health condition, as the concerns involved the symptoms she was experiencing.

It was held that it was incumbent upon Asda to have investigated the symptoms via occupational health prior to her return to work, rather than the risk assessment that was carried out. This was largely self-reported and found to be a ‘box-ticking exercise’. Had they done so, it wouldn’t have been necessary for her manager to approach her directly to speak about her symptoms and make her feel unwanted. Even though it was found the comments were well meaning, and the claimant’s manager was helpful and supportive of her, the overall situation created a hostile environment that led to discrimination, disability-related harassment and was, ultimately, a breach of the implied term of trust and confidence.

This judgment is an important reminder for employers that they must approach situations like this delicately. It will almost always be risky to ask about an individual’s plans to retire, as it can lead to them feeling pushed out of the business. Instead, the assumption should be that the employee will continue until they’re ready to go. Therefore, they should be asked, as no doubt younger colleagues are, what their future work aspirations are, and what the organisation can do to help them develop.

Having a retirement policy that employees can trigger themselves means employers can help them to feel comfortable in raising retirement within a defined framework. This can manage their expectations of the conversation and make it explicitly clear there is no pressure for employees to make such a significant decision regarding their working life. 


Featured in the May 2022 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.