The Sash Window Workshop Ltd & Anor v King (Contract of Employment : Sick pay and holiday pay)

Entitlement to paid annual leave under the Working Time Regulations 1998 does not generally permit payment for leave never taken in earlier leave years. A worker seeking to carry leave forward must establish, on facts found by the tribunal, that reasons beyond the worker’s control prevented or deterred the exercise of the right. A tribunal may not assume that paid leave would have been refused had it been requested.

Payment for leave actually taken, or statutory payment in lieu on termination, may be recovered as wages. Compensation for refusal to permit leave is instead the distinct remedy under the Regulations and is not an unlawful-deduction claim.

An injury-to-feelings award for discriminatory dismissal must reflect the actual anger, upset, humiliation and distress caused by discrimination. It cannot be reduced because dismissal might otherwise have been lawful. The 10% Simmons v Castle uplift applies to discrimination awards made after 1 April 2013.

The claimant was engaged as a commission-only salesman from 1999 until his dismissal at age 65 in 2012. The Employment Tribunal found that he was a worker for the purposes of the Employment Rights Act 1996 and the Working Time Regulations 1998, and that his dismissal was unlawful age discrimination.

The Tribunal awarded holiday pay, including £9,336.73 for leave said to have accrued but not been taken over earlier leave years, and £3,000 for injury to feelings. The respondents appealed the former award. The claimant cross-appealed the latter award.

The central issues were whether the claimant could recover pay for untaken leave over the full engagement as a series of deductions from wages, and whether the injury-to-feelings award had been lawfully assessed.

1. Both the appeal and cross-appeal were allowed. The awards for Holiday Pay 3 and injury to feelings were quashed and remitted to the same Employment Tribunal.

2. The Tribunal erred by approaching the holiday claim through regulation 14 alone. It should first have considered entitlement to leave under regulation 13, including the rule that leave must normally be taken in its leave year. Regulation 14, on its face, permits payment in lieu only for the termination leave year.

3. The compatible construction derived from NHS Leeds v Larner required findings on whether the claimant was unable or unwilling, for reasons beyond his control, to take leave and thereby failed to exercise the right. The Tribunal made no such findings. The claimant had taken leave in most years and there was no evidence that he had given notice of additional leave which the respondents refused. Non-payment was capable of deterring leave, but this did not justify an assumption that he had been prevented from taking it.

4. Regulation 16 concerned payment for leave taken. A general right to payment for leave not taken would conflict with the health and welfare purpose of annual leave and could produce double recovery where the worker worked and was paid for the relevant periods. If leave was lost at the end of a leave year, the associated entitlement to payment was also lost, subject to the Larner position.

5. A claim alleging refusal to permit annual leave was not, in substance, a claim for unpaid wages. Regulation 30 provides just and equitable compensation for that wrong; such compensation is not wages within section 27(1) of the Employment Rights Act 1996. The Tribunal also failed to address whether any alleged deductions formed a series, particularly given the multi-year gap identified.

6. The injury-to-feelings award was legally flawed. The fact that the claimant believed he could otherwise be dismissed at any time did not reduce the injury caused by dismissal on the prohibited ground of age. The Tribunal had also failed to assess relevant evidence of distress and stress. The 10% uplift required by Simmons v Castle applied to this statutory discrimination tort.

• Employment Appeal Tribunal: Both appeals allowed. The holiday-pay and injury-to-feelings awards were remitted to the original Employment Tribunal.
• Employment Tribunal: Held that the claimant was a worker under the Employment Rights Act 1996 and the Working Time Regulations 1998, and that his dismissal was unlawful age discrimination. It awarded £9,336.73 for earlier untaken leave and £3,000 for injury to feelings.