Empowering the Freelance Economy

Why Britain’s 1.6m temp workers should keep an eye on the latest holiday backpay appeal case

Julia Kermode of PayePass offers her insights into why the government is slow to regulate the umbrella industry
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45 self-employed couriers have been given the green light to pursue their claim for unlimited backdated holiday pay from their engager, in an upcoming employment tribunal. What are the case’s bigger implications for the agency and temp worker market and those that hire them?

The appeal case could have far-reaching implications for gig, temp and agency workers and contractors along with the businesses engaging these individuals – and is one of the first cases given consent as a result of the Pimlico Plumbers Court of Appeal verdict.

But what makes this case different? A reported twenty-four years of unpaid holiday pay for some of the couriers, that’s what.

What’s the background of the case?

In the Employment Appeal Tribunal, 45 medical couriers have been allowed to pursue their claim for unlimited backdated holiday pay from their engager. This could have major ramifications for the engagers of all temporary workers, including umbrella company workers, while also raising concerns over the confused nature of the relationship between employment status and workers’ rights. 

This case involves 49 self-employed medical couriers represented by the Independent Workers’ Union of Great Britain (IWGB). On the workers’ behalf, IWBG made a claim for backdated holiday pay from The Doctors Laboratory (TDL), which provides a range of pathology services. 

In 2018, in the initial employment tribunal, the couriers argued that their working relationship was akin to that of a ‘worker’, rather than ‘self-employed’, meaning they would receive paid annual leave. 

They sought retrospective holiday pay for the entirety of their engagement with TDL (for some, this dated back to 1999). While employment status has not yet been acknowledged as ‘worker’, back-dated holiday pay was granted but restricted to two years.

Instead, this money often goes straight into the pocket of agencies and umbrella companies at a time when independent workers need it more than ever. IWORK has long been campaigning for these workers to receive what’s rightfully theirs

Julia Kermode, IWORK

The bigger implications for temp workers

“This case could send shockwaves through the temporary labour market. It may prove to be the catalyst for ensuring that the UK’s 1.6m temporary workers receive vast amounts of missing holiday pay,” said Julia Kermode, founder of IWORK.

We know lots of platforms have incorrectly engaged individuals as self-employed when, in actual fact, they should be classed as ‘workers’ and therefore receive employment rights, such as holiday pay. Now there’s the potential to backdate this beyond the usual two-year limit,” said Kermode.

Kermode said that tens, if not hundreds, of millions of pounds worth of holiday pay is unclaimed yearly because temp workers often do not know that they are eligible for it – but it’s their statutory right.

“Instead, this money often goes straight into the pocket of agencies and umbrella companies at a time when independent workers need it more than ever. IWORK has long been campaigning for these workers to receive what’s rightfully theirs,” said Kermode.  

“Businesses will be watching closely, of course. Gig platforms and organisations facilitating false self-employment should be very worried about the potential cost to their business if current and previously engaged temps put forward their rightful claim to receive backdated holiday pay.”

Influence of the Smith v Pimlico Plumbers case

This latest case’s decision is to be appealed at an employment tribunal appeal, which was delayed until the judgment from the landmark Smith v Pimlico Plumbers case (released in 2022) was released. This case focused on backdated holiday pay and was heard at the Court of Appeal.

This Court of Appeal determined that provided a claim for holiday pay was made by the worker within three months of the termination of an engagement, the worker is entitled to retrospective unpaid leave. The decision set a precedent and is case law. 

As a result, the medical courier case will be reheard at a new employment tribunal, with the Smith v Pimlico Plumber case law factored in, it has been reported to The Freelance Informer.

“These workers and hundreds of thousands of others over the years have been denied holiday pay because the system hasn’t kept pace with the changing world of work,” said Rebecca Seeley Harris, founder of Re:Legal Consulting.

The worker status specialist said that “companies have been taking advantage of this, to the huge detriment of temporary workers. The upcoming employment tribunal could be a great leap forward in workers’ rights.”

To Seely Harris’ knowledge, this is the first case to be given consent as a result of the Court of Appeal’s judgement in Smith v Pimlico Plumbers, regarding holiday pay.

“If the fresh employment tribunal decides that the couriers are indeed ‘workers’ and deserve employment rights, then this case could open the door to many others in the gig economy,” said Seely Harris.

Why did this happen and could it have been avoided?

Seb Maley, CEO of Qdos

Seb Maley of employment status expert and contractor insurer Qdos said this case represents just one of the countless disputes in the gig and temp worker economy over employment status and, in turn, rights.

“As gig working grows, so does the confusion over whether these workers are self-employed, employed or somewhere in-between,” said Maley.

Maley said he believed that these cases are avoidable.

“If workers had their employment status assessed from the outset with each party agreeing to the terms, you wouldn’t see long, drawn out and expensive tribunals in which employment status is argued,” he said. 

He continued, “Also key to point out is that if a worker is engaged as self-employed but, following an employment tribunal is deemed to be an employee, the business engaging them could be held liable for retrospective employment taxes, in addition to holiday pay. The figures involved could financially devastating.”

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