‘Tis the holiday season

The Christmas holiday season is upon us and there has been a recent and very important case about holiday entitlement.

In King v Sash, a commission-only salesman whose services were terminated, brought a claim (amongst others) for unpaid holiday pay. He argued he had not taken his full annual leave entitlement each year because it would have been unpaid. Mr King’s employer believed him to be self-employed, and his ‘employer’ therefore did not give him paid holiday leave. However the tribunal found Mr King was a worker and consequently entitled to 5.6 weeks’ paid annual leave.  

After a series of appeals, the matter was eventually referred to the European Court of Justice (ECJ) which held that if a worker does not take paid annual leave, on the basis the employer refuses to pay, the holiday is not lost and is carried over to the next holiday year, and the one after that, until it is taken or paid if the employee leaves.

The ECJ held that it did not matter that his employer believed Mr King was not a worker. Their view was somewhat unsympathetic to the legal complexities of employment status and the ECJ expressed that view that employers are responsible for informing themselves of their obligations, and an employer that does not allow a worker to exercise their right to paid holiday must bear the consequences.

Furthermore, whilst Mr King’s employer argued that the Working Time Regulations 1998 provide that if not taken in the relevant holiday year, the holiday entitlement is lost, the ECJ did not agree with this. It held that since the right to paid holidays cannot be subject to any preconditions whatsoever, if a worker is prevented from or won’t take holiday because the ‘employer’ won’t pay them, they are thus prevented from exercising their important EU Rights. Therefore workers cannot consequently be prevented from bringing a claim for their holiday entitlement because a new holiday year has started.

What also makes this a striking decision is that if the employer is deemed to have failed to grant paid holidays to workers, they are not entitled to benefit from the normal limits on how much holiday year can be carried over. In fact the worker can go all the way back to 1996 and claim from when the Working Time Directive came in to force.

The financial implications of this are significant as workers, whose worker status has not been acknowledged, will be deemed to have been ‘prevented’ from taking their holiday thus allowing the worker to claim holiday entitlement going back over 20 years.

This case highlights that holiday entitlement is a fundamental right which provides a period of rest and relaxation and this is of huge persuasion to the Courts. It is therefore of crucial importance to understand and correctly record the nature of the working relationship of those engaged to work for your business.

As we see a raft of recent cases (as part of the ‘gig’ economy climate) finding that those ‘self employed’ contractors are in fact workers, the stakes are high and such claims would prove to be a significant cost to a business that does not correctly identify those who are workers and entitled to paid holidays.

Posted on: 19/12/2017

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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