Indefinite carry over of unpaid annual leave approved by European Court

All employees and workers in the UK are entitled to be paid for 5.6 weeks holiday per year.

However, with the recent rise in ‘gig economy’ cases which have held that self-employed individuals were in fact workers, there is likely to be an  increase in claims for the payment of holiday pay and the King v The Sash Window Workshop Ltd (C-214/16 CJEU) is such a case.

Mr King worked for the Respondent for 13 years as a ‘commission-only’ salesman. As such, he did not receive any rights associated with being a worker, including a salary, holiday pay or sick leave. However, after 9 years of working for the Respondent, Mr King was offered a contract of employment, which included the right to be paid for holidays. Mr King refused this offer and continued to work as a commission only salesman. When Mr King turned 65, the Respondent terminated Mr King’s contract. Subsequently, Mr King brought, amongst others, a claim for unpaid holiday pay and stated that he had not taken his full holiday entitlement as he knew that they would be unpaid.

The Employment Tribunal (ET) found that Mr King was a worker and therefore should have been paid for all of his accrued, but untaken holiday in the current year until his termination date and for all previous years. Additionally it was determined that he should also have been paid for the holiday which he had taken in the past 13 years, but which he had not been paid for, as this was an unlawful deduction from his wages.

This decision was appealed by the Respondent to the Employment Appeal Tribunal (EAT) who overturned the decision of the ET on the basis that Mr King had not lost out financially as he had continued to work instead of taking holiday. Additionally, it was held that the ET had not adequately established that Mr King had been prevented from taking annual leave by reasons beyond his control.

Subsequently, Mr King appealed the decision to the Court of Appeal, who, in turn, referred a number of questions to the European Court of Justice including whether a worker had to take annual leave before being able to dispute whether or not they should have been paid for it. The European Court of Justice held that where an employee is prevented by their employer from taking their annual leave, it is a breach of EU law. Additionally, the Court of Appeal asked how far back, the Claimant should be able to claim for. As the employer had breached their obligations, it was determined that an employee who is prevented from taking their annual leave, can bring a claim for non-payment of holiday pay dating back to the enforcement of the Working Time Directive in 1996.

Effect of the case

As a result of this important case, there could be significant implications for many ‘gig economy’ companies. If individuals who are working on a self-employed basis are deemed to be workers, it seems evident that they will now be entitled to claim for holiday pay with the only limit being the introduction of the Working Time Directive in 1996. This ruling only applies to the 4 weeks holiday leave which is necessary under EU law (under UK law, this is extended to 5.6 weeks). This could bring a deluge of cases to the ET with more and more individuals attempting to have their employment status confirmed as being worker as opposed to self-employed. 

Katy Williams is a Trainee Solicitor working with Debbie Fellows in our specialist Employment Law team. For more information about holiday pay entitlements please contact Debbie on 01382 229111 or email dfellows@thorntons-law.co.uk, alternatively contact any member of our Employment Law Team.

Categories: Employment

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