As we approach the shortest day and Christmas thoughts of holidays may seem a long way off. For employment lawyers and many businesses thoughts of holiday pay pose many difficult and problematic questions.
The GiG economy has spawned numerous employment claims with individuals seeking either employment or worker status because of the rights these individuals have. The risks posed by these claims, so far as holiday pay is concerned can be seen in the ongoing saga of Sash Windows Ltd v King.
Mr King was engaged on a “self-employed commission only” basis and worked for Sash Windows (SW) for over 13 years. When he took holiday he was not paid. Following the termination of his engagement in 2012 he claimed that he was a worker and entitled to:
(i) Holiday accrued due but untaken in his final year
(ii) Holiday taken but unpaid in the period of his engagement (1999-2012)
(iii) Holiday accrued but untaken throughout the entirety of his engagement (24.15 weeks).
The employment tribunal found that he was a “worker” and entitled to all three types of holiday pay. The case was appealed to the EAT and then the Court of Appeal, by which time it was accepted that he was a worker and entitled to holiday pay under (i) and (ii) above. The issue in the Court of Appeal was whether he was entitled to carry over holiday accrued due but untaken from one year to the next with no cut off because he had been prevented from taking holidays because of SW. The Court of Appeal referred a number of questions to the Court of the European Union (CJEU). The CJEU answered the questions posed by saying:
(i) It is not necessary for a worker to take leave before establishing whether he has a right to be paid;
(ii) Mr King was not in the position of workers who are on long term sick leave and who will eventually lose carried forward holiday when they return to work;
(iii) It was not necessary for Mr King to have requested the holiday for him to have rights to holiday pay;
(iv) Employers who do not allow workers to take paid annual leave must bear the consequences;
(v) Unless there was a national limit on carried over holiday the provision for paid holiday could not be interpreted restrictively, otherwise employers would benefit from their own wrongdoing;
(vi) Workers in these circumstances could not be prevented from carrying forward and accumulating the right to paid holiday until termination of their engagement.
The Court of Appeal will have to interpret and apply the CJEU’s decision. It seems likely, given the terms of the judgment, that Mr King will be entitled to the additional 24.15 weeks’ pay. If that is the approach taken it will throw greater focus on the issue of status particularly those who have been working for long periods of time for a single entity.
What happens to claims of back pay? Whilst we have rulings from Europe as to when carried over holiday ceases in cases of long term sick – what about being prevented from taking holidays where they is no absence, just excess workload or employer prevention? The CJEU’s judgment would seem to indicate that the limitations requiring there to be a gap of no more than three months in respect of a series of unlawful deductions (see Bear Scotland v Fulton case) and the two year cut off for holiday pay claims introduced by the Deduction from Wages (Limitation) Regulations 2014 may be of no assistance in curtailing the extent of Mr King’s claims under (iii).
Employers are advised to ensure that their workers are taking holiday during the holiday year – this is important not just for health and safety purposes but also with compliance with Working Time rules. Now is the time to check your holiday calendars and make sure holiday is taken.
We will continue to monitor and report on the ongoing development of this area of law both with regard to status and entitlements such as holiday pay. If the issues arising in Sash Windows are a cause for concern please do not hesitate to contact us on 0118 952 7284 and [email protected].
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.