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UK – Ruling in Pimlico Plumbers case could have financial impact on other businesses

UK – Ruling in Pimlico Plumbers case could have financial impact on other businesses

February 3, 2022

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A UK Supreme Court ruling over holiday pay in the lawsuit Smith v. Pimlico Plumbers means any worker - including self-employed, gig workers and umbrella workers - are entitled to paid leave and that the employer has to make sure they are aware of this.

Rebecca Seeley Harris, chair of the Employment Status Forum and former advisor to the office of tax simplification, told City A.M. this morning that “today’s judgment is perhaps one of the most significant I have seen for a long time when it comes to protecting workers’ rights, specifically for the entitlement to paid annual leave.”

Separately, an analysis by law firm Irwin Mitchell LLP found the ruling in the Pimlico Plumbers case could have a huge financial impact on other businesses with workers previously classified as self-employed.

Campaigners have argued for some time that the regulation of umbrella firms has been weak and there have been instances where workers have been left without holiday pay and charged hidden fees.

Crawford Temple, CEO of Professional Passport, an independent assessor of payment intermediary compliance, lauded the court’s decision. “For far too long, as we saw highlighted in the BBC’s Moneybox programme in March last year, some umbrella companies have been concertedly and consciously withholding holiday pay from umbrella workers that is theirs,” Temple said. “This latest ruling means that this can now no longer happen in law.  Umbrella workers will be able to claim what is rightfully owed to them”.

Dave Chaplin, CEO of IR35Shield commented: “Umbrella companies who were using opaque practices to avoid paying out, and then keeping, holiday pay, may have a problem - because they may have to pay it back. And in many instances, they won’t have the money, because they’ve given half of it back to the [staffing] agency, as a kickback”.