In the landmark case of King v The Sash Windows Workshop Limited, the European Court of Justice (ECJ) has ruled that a worker was entitled to 13 years of untaken annual leave because the employer refused to remunerate that leave and therefore prevented the worker from exercising EU rights.
King worked on a “self-employed commission-only basis”, however, a Tribunal later found that he should have been treated as a full-time worker under the Employment Rights Act 2010, meaning he was entitled to 5.6 weeks’ of paid annual leave.
King argued that he was entitled to receive payment for previously taken unpaid leave, and claimed for all holiday he had accrued since the beginning of his employment with Sash Windows in 1999. He also argued that the reason he had not been able to take this leave was because the business did not provide holiday pay. The employer argued that the Working Time Regulations 1998 provide that if paid holiday is not taken in a leave year, then it is lost.
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The ECJ found that King was not required to take annual leave first before establishing whether he had the right to be paid for it and stated:
“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”
The ECJ concluded that, “an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences.”
Therefore, a worker cannot be stopped from bringing a claim just because a new holiday year starts and an employer who fails to grant workers paid leave should not be entitled to the normal limits on how much can be carried over.
The “bombshell judgement” will have profound consequences, as employers may find themselves exposed to substantial holiday pay claims where a ‘self-employed’ contractor is found to be a ‘worker’ and therefore entitled to the same rights as Mr King. In particular, ‘gig economy’ companies, will need to be particularly cautious as workers in the gig economy – including taxi drivers, delivery drivers and couriers – are classed as independent contractors. However, as recent judgements (involving Uber and Pimlico Plumbers) have shown the classification on employment status is not always as clear-cut as first appears.
If you are an employer or an employee, and you believe you are affected by issues raised from this decision or should you require any further information, please contact us online by clicking here or speak to a member of our specialist team on 0333 222 1855 .