Call us now 01473 688100

Failure to pay statutory annual leave is a deduction from "wages"

Posted on 22nd June 2009
Case law

The House of Lords has decided that the non-payment of statutory annual leave can be claimed as an 'unauthorised deduction of wages' as opposed to being a claim that has to be made under the Working Time Regulations. The key issue being time limits.

On this page

Meet the author

Simon Quantrill Simon
Quantrill
Managing Partner Telephone: 01473 688100

failure to pay annual leave entitlement was non-payment of wages

Stringer and others v HM Revenue and Customs

Please note that this article is not the latest position.  Read our later articles Right to defer holiday until after sick leaveSickness during holidaySickness absence and the entitlement to payment on termination of employment for untaken holidayEntitlement to statutory holiday pay is lost if not requested by employee on long-term sick leave and Holidays and sickness absence.

Background

One of the claimants who was then on long-term unpaid sick leave made a request for paid annual leave under regulations 13 and 16 Working Time Regulations. A number of other workers claimed payment in lieu of annual leave which they had been unable to take during the previous holiday year. Revenue and Customs refused to pay.

One of these claims was brought under the wrongful deductions from wages provisions of the Employment Rights Act 1996. The other workers brought their claims under regulation 30 of the Working Time Regulations. Previously the Court of Appeal held that such claims could only be made under regulation 30.

The key point being that under regulation 30 the time limit for bringing any claim relating to the non-payment of annual leave is three months from the date of each non-payment. In practice this has meant claimants have had to keep putting in new claims for continued non-payment of annual leave! From the tribunal's point of view they have had to cope with an increase in Claim Forms.

If claims could be brought under section 23 Employment Rights Act 1996 the time limit is three months from the last in a series of deductions, which may have taken place over several years. Thus the effect of claiming under section 23 is that unpaid annual leave from previous years could be claimed. Similar claims would be time barred under the Working Time Regulations. The House of Lords had to decide if claims could only be made under the Working Time Regulations as reflected in the previous case law.

The House of Lords decision

The House of Lords held that any failure to pay annual leave entitlement was non-payment of "wages", as defined in the Employment Rights Act 1996. Therefore claims under section 23 were valid and could be back dated if they formed part of a series of deductions.

In practice

The House of Lords' decision could result in significant costs for employers as the more favourable time limits under the Employment Rights Act are now available with these types of claims. Claims going back a number of years are now possible.

Clear, concise and accurate information for employers and HR professionals

Visit the hrlegal archive

Find out how we can help you

Click here to contact us or phone us 01473 688100

Keep your legal costs down with

Professional telephone and email advice and guidance for solving your everyday employment law and HR issues

No waffle, well written employment law updates and HR news articles, including case reports, helping employers and people managers keep up to date with what's important

Related articles