Person Thought To Be Self-Employed Wins Backdated Holiday Pay

Year Published: 2017

A recent European Court of Justice (ECJ) case between Mr King and The Sash Window Workshop has raised eyebrows between employers and raised the issue that if a worker is not provided with paid annual leave, that right will carry over until the worker has chance to take it. This could leave employers open to potential claims for backdated holiday pay.  Employers who engage self-employed individuals will be reassessing the potential risk of those individuals arguing they are actually workers, not self-employed, just as Mr King did.

What happened in the ECJ case?

Warren Moores, Employment Law & HR Solicitor at SAS Daniels

Warren Moores, Employment Law & HR Solicitor

Mr King worked as a self-employed salesman for The Sash Window Workshop between 1999 and 2012.  His contract did not say anything about annual leave and he was not paid for any leave he took. In one year he took no leave at all. He also turned down an employment contract in 2008. However, when Mr King was dismissed, he challenged whether he was in fact genuinely self-employed, arguing he was in fact a ‘worker’ due to how his relationship with the company was operated.

In the eyes of the law, workers have less rights that employees but are still entitled to basic employment rights including annual leave. Mr King claimed he had not taken his holiday because he had been too busy and it was unpaid so, he should have been able to carry over his annual leave which he was unable to take and he wanted it to be paid on termination.

Under the Working Time Regulations 1998, leave may only be taken in the year in respect of which it is due. The only exception to this is if worker has been off on long term-sickness and therefore unable to take their annual leave. So, the Court of Appeal referred the matter to the ECJ for consideration.

What judgement did the ECJ make about unpaid leave and backdated holiday pay? 

On 29 November 2017, the ECJ agreed with Mr King and decided that he is entitled to be paid for any untaken leave. The ECJ pointed out that EU law requires a worker to know they are going to be paid before they take annual leave. Mr King was therefore entitled to carry over his accumulated untaken leave.

If the Court of Appeal follows the ECJ, which is the normal practice, the outcome of this case could have a huge impact on employers across the UK. It could raise awareness for workers across the country (including those potentially miscategorised as self-employed) and lead to many exercising their rights to backdated claims.

This decision is limited to the 4 weeks statutory holiday entitlement under the Working Time Directive, which totals 20 days per year (not the full 28 days which all UK workers are legally entitled to receive per year). Regardless, the stakes are all of a sudden a lot higher for those who employ workers and those classed as self-employed who may arguably be workers.

What we do know is that, from the ECJ’s current decision it appears anyone, who can successfully argue they are a ‘worker’, can potentially claim for untaken annual leave if they have been denied the right to take it. These claims could date back to 1996 when the Working Time Directive came into force, if they have been denied the right to take it.

For more information on claims of unpaid leave and worker’s rights, please contact Warren Moores in our Employment Law & HR team on 0161 475 1225.

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