The Working Time Regulations 1998 ("WTR") state that holidays cannot be carried over from one leave year to the next. The Court of Appeal modified that slightly when holding in NHS Leeds v Larner that if a worker is prevented from taking holidays through illness they must be able to carry the holidays forward. The CJEU subsequently confirmed in a German case that if the holidays carried forward is not taken within 15 months then the right to it would lapse. The WTR also prohibits payment being made in lieu of taking holidays unless a worker has accrued but untaken leave on termination of employment.
One of the better known recent holiday pay cases - Fulton v Bear Scotland - held that where there was a gap of more than three months between deductions (in this case the holidays) that will break the chain in a series of deductions claim.
Mr King initially worked for the Sash Window Workshop (SWW) as a self employed commission only salesman for approximately 13 years. Although he had taken some holiday during this period he had never been paid for it. He subsequently made a successful claim for holiday pay, the Employment Tribunal accepting he was a worker for the purposes of the WTR. He had claimed his holiday pay as a series of deductions and was awarded pay in lieu of accrued but untaken leave going back through his engagement with SWW.
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.
The matter was referred to the CJEU. Advocate General Tanchev has now given an opinion setting out that:-
- Employers must provide adequate facilities to enable workers to exercise their right to take holiday;
- Where a worker does not take holidays because he will not be paid for them that equates to "preventing" a worker form exercising his right, and the accrued holiday will be carried over until he is given the facility to take the holiday, or until his employment terminates, whichever is the earlier;
- Where a worker has been prevented from taking holiday he can, on termination, claim backdated holiday for the whole period of his employment; and
- The worker is not required to take the unpaid leave in order to establish an entitlement to be paid for it.
This decision appears to be incompatible with both the existing case law on the right to carry forward accrued holiday, and, in particular, with the Deduction from Wages (Limitation) Regulations 2014 which limits Employment Tribunals to looking back only 2 years from the date of the complaint when considering an unlawful deduction from wages claim. The Advocate General's opinion is not binding on lower courts and tribunals. However, if the CJEU were to agree with him then this case could have significant implications for employers, particularly those in the gig economy (see our Gig Economy Watch section) where there is a trend for the "self employed" to be found to be workers with rights to holiday pay.