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Workers Holiday Pay Case Could be Costly for Employers

DM
BY Donald MacKinnon
Employment Law & HR
BG Purple

A recent judgement by the European Court of Justice (ECJ) may come as a shock to many employers.  In Sash Window Workshop and another v King the ECJ ruled that a worker who was not paid holiday pay for 13 years working, as the company saw it, as a self-employed contractor, was entitled to back payment of all holiday accrued during this time.

As King was deemed to be self-employed when he worked for Sash Window Workshop between 1999 and 2012, when he took time off he was unpaid. It was ultimately decided that King was in fact a ‘worker’ under the Employment Rights Act 1996 and therefore entitled to paid holiday. The ECJ held that not only did King have the right to be paid for the time off he had taken during this time, but also for holiday accrued but untaken stating that a worker does not have to take the leave for them to be paid for it. In this case Mr King had not taken leave because he did not believe he would be paid for it.

Importantly, the Deductions from Wages (Limitation) Regulations 2014 which limit employer’s liability for unpaid wages to two years from the date of the claim, would not apply in this instance because the Working Time Directive excludes domestic laws which limit a worker’s ability to carry over holiday when he has been unable to take them because the employer refused to pay.

This decision potentially has major ramifications for businesses, particularly those who have a number of self-employed contractors who have long service and are deeply integrated into the business, or meet other criteria that may lead to them being deemed workers if they brought a claim.  

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