13 years’ Holiday Pay

29 November 2017

Today the CJEU (ECJ) gave judgment in the case of King v The Sash Window Workshop Ltd and another C‑214/16.

Mr King worked for SWW from 1999 to 2012 under the capacity of a “self-employed commission-only contract”. He received commission only and any annual leave he opted to take was unpaid.

After his retirement he brought an Employment Tribunal claim for unpaid annual leave covering the 13 years of work. The Tribunal accepted that Mr King had been a worker (our guide on Employment/Worker/Contractor status can be found here). There followed appeals to the Employment Appeal Tribunal and Court of Appeal on a number of different points.

In spring 2016 the Court of Appeal referred questions to the CJEU on the compatibility of UK law (Working Time Regulations 1998, as amended) to EU law (the Working Time Directive 2003) and the interpretation of the latter. As a reminder: the EU Working Time Directive 2003 is implemented in to UK law by Working Time Regulations 1998 (as amended).

The CJEU concluded that Mr King was entitled to 13 years’ holiday pay regardless of not taking all of the annual leave to which he had been entitled. It was not for Mr King to take unpaid leave and then seek to claim payment after the event. The CJEU set out that “any practice or omission of an employer that may potentially deter a worker from taking his annual leave is equally incompatible with the purpose of the right to paid annual leave”. And it was “irrelevant whether or not, over the years, Mr King made requests for paid annual leave”.

The European court adjudged: “an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences”.

In conclusion: EU law precludes (1) workers having to take their leave first before establishing whether they have the right to be paid in respect of that leave; and (2) national provisions/practices that prevent workers from carrying over and, where appropriate, accumulating, until termination of their employment relationship, paid annual leave rights not exercised in respect of numerous consecutive reference periods because their employer refused to remunerate that leave.

This case is making national news today because of the potential impact on workers who are incorrectly classified as ‘self-employed contractors’ and those who engage them. Such individuals may be able to claim back pay in respect of unpaid annual leave going back many years (from when their ‘worker’ status can be established). The case also indicates that the Deduction from Wages (Limitation) Regulations 2014, which limit claims for back pay to two years, may be incompatible with EU law. Certainly, at the termination of the engagement, workers can bring claims going back a lot further than 2 years.

If you would like to speak to our team about the issues raised by this case then do contact us.