The European Court of Justice have issued a judgement in the case of King v The Sash Window Workshop Limited and anor that has significant implications for workers wrongly classified as self employed who claim back dated holiday pay.
Mr King worked for The Sash Window Workshop ("SWW") as a self employed commission only salesman between 1999 and 2012. In 2008 Mr King had been offered an employment contract which included the right to holiday pay but had opted to remain in self employment. During his engagement with SWW Mr King had taken holidays but was never paid for them. When his contract was terminated in 2012 he successfully claimed for holiday pay before the Employment Tribunal on the basis that he had in fact been a "worker" and not self employed.
When SWW appealed to the EAT they agreed that where a worker was unable or unwilling to take holidays for reasons beyond his control - in this case the fact he could not afford to take the holidays because he would not be paid for them - he may be entitled to carry over the holiday entitlement. However, as the Tribunal in this case had not set out in their judgement why the holiday wasn't taken the case was sent back to the Tribunal to reconsider this. The EAT also made two other points. Firstly, that as Mr King had worked (and been paid for it) rather then take the holidays, there had been no deductions and secondly that there were more than three months between the unpaid holidays that King had taken.
Mr King appealed to the Court of Appeal who subsequently referred 5 questions to the ECJ seeking clarification on:-
- Whether regulation 13 of the Working Time Regulations 1998 ("WTR") was consistent with Article 7 of the Working Time Directive ("WTD");
- In what circumstances untaken paid leave can be carried over; and
- Whether paid leave can be carried over indefinitely.
In June we blogged on the Opinion of Advocate General Tanchev. One of the conclusions reached by AG Tanchev was that where a worker does not take holidays because he is not paid for them that equates to "preventing" the worker from exercising the right and that in those circumstances accrued holiday will be carried over until the worker is given the facility to take the holidays, or the termination of employment, whichever is the earlier. Furthermore, on termination, such a worker can claim backdated holiday for the whole period of his employment and he will not be required to have taken the leave to establish a right to be paid for it.
The ECJ has now handed down a judgement which goes even further finding:-
- To the extent that the WTR requires workers to have actually taken the leave they subsequently claim payment for, they are incompatible with Article 7 of WTD. That requirement means workers who have not taken the leave because they are not paid for it have no effective remedy;
- Where a worker has not taken holiday because the employer has refused to pay them the WTD requires the right to paid leave to accumulate until the termination of employment. It doesn't matter that in this case SWW thought K was not entitled to paid annual leave as it is the employers' responsibility to inform himself of his obligations in this regard.
For companies at risk of having wrongly categorised workers as self employed this judgement opens the door to potentially years of backdated holiday pay claims. While the impact of this judgement is not sector specific it will be of particular concern to those in the gig economy with employment status claims pending.