In a landmark ruling yesterday, the European Court of Justice in the case of The Sash Window Workshop v King held that anyone deemed to be a “worker” is entitled to claim holiday pay for the whole of their employment, if they had not been allowed to exercise their right to take it.
Mr King worked as a “self-employed” sales person for over 12 years on a commission only basis. He did not receive any pay when he was on holiday or sick leave. When he left in 2012 he brought claims in the Employment Tribunal for unlawful deduction of wages relating to holiday pay.
The ET deemed that he was a full time “worker” and found that he was entitled to paid annual leave under the Working Time Regulations. However, under the UK regulations, a worker has to give notice to take holiday and if they don’t exercise their right to take it in the current holiday year, they lose it, except in cases where they have been unable to do so due to long term sickness, for example. The Employment Appeal Tribunal found that there was no evidence that Mr King had actually requested, and been refused paid holiday and therefore lost the entitlement.
Mr King appealed the decision to the Court of Appeal, who referred it to the European Court of Justice.
The ECJ said: “A worker must be able to carry over and accumulate unexercised rights to paid annual leave when an employer does not put that worker in a position in which he is able to exercise his right to paid annual leave. They went on to say that “the employer was able to benefit, until Mr King retired, from the fact that he did not interrupt his professional activity in its service in order to take paid annual leave” and that “an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences”.
It made no difference that Sash Windows had not considered the status of Mr King, as a worker and therefore entitled to paid holiday, they determined “The fact that Sash Window Workshop considered, wrongly, that Mr King was not entitled to paid annual leave is irrelevant. Indeed, it is for the employer to seek all information regarding his obligations in that regard”.
Currently, there is a two-year back stop on claims for holiday pay. However, the ECJ had to decide whether European Law allowed him to claim payment for the entire length of his employment. It was determined that the two-year backstop in this case had no relevance.
The ECJ therefore determined that under the Working Time Regulations, a worker does not have to take a period of unpaid leave to bring legal action for pay for that leave. The ECJ confirmed that leave may be carried over and a claim brought on termination. As a result, Mr King is entitled to claim backpay for the whole of his employment from 1999 to 2012, a potential liability for Sash Windows of £27,000.
Now that the ECJ has given its opinion, the case will now be referred back to the UK Court of Appeal, where it is thought highly likely that the COA will agree with the ECJ’s verdict.
This is a significant ruling, which could open the floodgates to huge claims for untaken holiday dating back many years, for those employers who have engaged self-employed contractors who are actually deemed to be workers. It is all the more important that employers now seek advice on the real status of their workforce, for those continuing to use “self-employed” contractors.
For any enquiries, please contact one of our employment team on 01254 828300.