When is an employee entitled to carry over holiday pay?
The European Court of Justice (the “ECJ”) has ruled in King v Sash Windows, that employees are entitled to carry over their entitlement to paid holiday in instances where holiday pay has not been taken because the Employer has refused to pay.
In 2008, the Sash Window Workshop (the “Workshop”) offered Mr King a job. When the Workshop provided him with a contract of employment to sign he refused and elected to remain “self-employed”. When he left the Workshop in 2012, Mr King brought a claim that he had been subjected to unlawful deductions from wages over the course of his 13 years working with the Workshop.
Mr King sought compensation for loss of holiday pay for the unpaid leave he had taken in a number of years, as well as pay for the holiday that he had accrued, but not taken, in other years. The ET upheld his claim, finding that he was a ‘worker’ for the purposes of UK working time regulations and was therefore entitled to annual leave with pay or pay in lieu of annual leave.
The Workshop appealed the Tribunal’s decision and after examining the evidence in the case, the Employment Appeal Tribunal remitted the case back to the ET. Mr King appealed to the Court of Appeal which referred the case to the European Court of Justice.
In the Judgment, published on Friday 1 December, the ECJ stated that “the assessment of the right of a worker, such as Mr King, to paid annual leave is not connected to a situation in which his employer was faced with periods of his absence which, as with long-term sickness absence, would have led to difficulties in the organisation of work. On the contrary, 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.”
This may mean that Employers who have been wrongly considered ‘self employed’ may now be retrospectively liable. In practice, this may mean that employers who benefit from ‘self employed’ contractors who are actually correctly classified as ‘worker’ (such as Uber and Pimlico Plumbers) may have claims brought against them by employees for many years of untaken holiday pay.
If you would like further information on this topic, you can contact Millie Kempley or another member of the employment team on 0345 070 6000.