An outline of an important case and some upcoming changes

Court of Appeal overrules lower courts in Smith vs. Pimlico Plumbers

The Court of Appeal has ruled on the long-running Smith vs Pimlico Plumbers case and overturned the decisions in lower courts to force Pimlico Plumbers to compensate Smith for previously unpaid annual leave. This is reported to amount to nearly £70,000.

This case has been going on for a number of years and followed Smith winning an original case in the Supreme Court proving that he was a worker of Pimlico Plumbers and not self-employed.

Despite Pimlico Plumbers agreeing that Smith was entitled to paid holiday, they argued that he had lost the right to claim it by leaving it too late – the so-called “use it or lose it” practice which is fairly commonplace in most regular employment contracts. In fact, the original Employment Tribunal and the Employment Appeals Tribunal agreed with Pimlico Plumbers, but the Court of Appeal has now reversed that and decided that Smith can claim holiday pay for the previously unpaid annual leave as he was prevented from doing so by the employer. This is an extremely important judgement for those who have not been paid for holidays because they were regarded as being self-employed rather than “workers” for the end-client.

Does this mean that workers now have the right to pursue claims for holiday pay they didn’t receive? Well, the short answer is no. In the judgement, which was unanimous, Lady Justice Simler states:-

“A worker can only lose this right if the employer can specifically and transparently show that they gave the worker the opportunity to take paid annual leave, encouraged the worker to take paid annual leave and informed the worker that the right would be lost at the end of the year. If the employer cannot evidence this process, then the right does not lapse at the end of the year, it carries over and accumulates until termination of the contract. Upon termination, the worker is entitled to a payment in respect of all of the untaken leave.”

It is notable that this judgement only applies to the four weeks’ leave derived from EU law, and not to the additional 1.6 weeks provided in the UK by the Working Time Directive.

UK Points based immigration system – update to the shortage occupation list 

As you know, Brexit saw the end of the free movement of people, which meant that the way in which UK employers recruited from outside the UK significantly changed. It meant UK employers needed to use a new points-based immigration system to recruit anyone from outside the UK on a visa.

For most sectors, the change was manageable, but for sectors such as health and social care it resulted in significant challenges such as high vacancy rates, and staff turnover both of which added to the already existing pressure that staff were under because of COVID-19. This is because the role of a care worker was not included in the government’s list of skilled occupations.

However, the Migration Advisory Committee (MAC) have advised the government to add care workers to the list of skilled occupations, stating it was needed to deal with “severe and increasing difficulties” that the sector was experiencing with recruitment and retention.

With effect from 15 February therefore, an employer will be able to recruit care workers from outside the UK on a skilled worker visa.  An updated shortage occupations list has been published on the government’s website.

Reminder: Health and social care levy

Further to the above rate increases, from 6 April 2022, the new Health and Social Care levy will mean employees, employers as well as the self-employed pay a further 1.25% each, in tax from 6 April 2022.

The HMRC need to update their existing systems to properly process these additional funds. Therefore, temporary measures will be put in place which will result in a temporary increase to the main and additional rates of class 1 (A and B) and class 4 (self-employed) National Insurance contributions from April 2022.  These will revert to normal levels in April 2023. At this point the new identifiable Health and Social Care Levy will be in force and the 1.25% increase will instead be collected under the levy.

This new levy will be subject to the same reliefs, thresholds, and requirements of the qualifying NIC contributions.  For those employers who employee individuals over the state pension age, then they will not be affected by the temporary measures and will only become liable to pay the levy from April 2023.

And finally……

Should you have any questions related to the items in this newsletter or needs assistance to implement, do contact one of our highly qualified Area Directors  or email us at

Steve Wright

Managing Director.

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