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Holiday Carry-Over fit for a King

BY Kirstie Beattie
Employment Law & HR

Hot on the heels of the Uber appeal case comes the decision of King v The Sash Window Workshop Ltd. In this case, Mr King was a commission-only salesman for 13 years. He was paid no salary and was never paid for any holidays or sickness absence. The Sash Window Workshop (SWW) terminated his contract when he turned 65. Mr King made a claim in relation to unpaid holiday pay, claiming that he did not take his annual leave entitlement each year as it would have been unpaid. The Employment Tribunal held that he was a worker in terms of the Working Time Regulations and therefore was entitled to holiday pay for:

     - Leave accrued in the final leave year but untaken on the date of his dismissal

     - Leave requested and taken as unpaid leave in previous years

Leave accrued but untaken in previous years

SWW appealed this decision to the European Court of Justice. The Advocate General gave his opinion that employers must enable workers to paid annual leave. Where a worker does not use all of their holiday entitlement because their employer refuses to pay them for it, the worker has been prevented from exercising their right to paid leave. In such cases, the worker has the right to carry forward their holiday entitlement until they can exercise the right to paid leave or until termination of their employment contract.

The ECJ agreed with the Advocate General commenting that:

     - The wording of the Working Time Regulations suggests that a worker should take unpaid leave and then try and reclaim the money back which is not an effective remedy for this issue.

     - The annual leave will be affected by a worker if they are not being paid for it as they will not be able to fully benefit from it as a period of relaxation and leisure. This may dissuade them from taking the leave which is contrary to the Directive.

Unlike previous decisions on holiday carry-over and sickness absence, carry-over where a worker has been prevented from taking annual leave by their employer has not been limited. This is because the organisation had not been negatively impacted by the workers’ absence and if anything, benefitted from the fact he did not take his annual leave entitlement.

This could have large implications for employers operating within the gig economy who may have to pay out large sums to workers on the termination of their contract, not only for accrued annual leave but any annual leave they have been prevented from taking because it would have been unpaid. However, at this time it is unclear how this will match up with the regulations that prevent claims for more than 2 years’ of back pay in unlawful deduction of wages claims.

What is clear is that Employment Tribunals will continue to look to the actual nature of the contract in order to ensure that where individuals are workers, they are able to fully enforce their rights. If you are unclear about how to distinguish between a self-employed contractor and a worker, get in touch with your dedicated Employment Solicitor today. 

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