Commission and holiday pay (King v Sash Windows)

The European Court of Justice (ECJ) has ruled if an employer refuses to pay a worker for annual leave, the worker will be able to carry over and accumulate his or her holiday rights until their employment terminates. This potentially allows the worker to pursue a claim for unpaid statutory holiday that spans the entire employment. 

We reported earlier this year on a preliminary ruling on this case in the REC July/August Legal bulletin which concerns Mr King who worked on, what was described, as a commission only self-employed contract for a number of years. During that time he was not permitted to take paid holiday. His contract was terminated when he turned 65.

This decision relates particularly to a claim that Mr King brought in an employment tribunal for pay for leave that he had not taken over the entire period of his employment. 

There are time limits that apply to holiday pay claims under UK law, but as holiday pay entitlement is based on European law (the Working Time Directive), the case was referred to the ECJ for a decision.  It was accepted by the time that the claim was referred to the ECJ that he was in fact a worker and entitled to holiday pay but Sash Windows argued that he was out of time to bring the claim. 

The ECJ has today ruled that UK legislation that limits holiday pay claims is not compatible with the WTD, in that it is not permissible under the WTD to prevent a worker from carrying over holiday until the end of employment where they have not taken that leave because the employer refused to provide paid leave. 

In the words of the ECJ ‘an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences’. The implications of this case are that individuals who have not taken paid holiday because their employment status been incorrectly represented to them by their ‘employer’ (e.g. as self-employed contractors rather than as workers) could potentially claim holiday pay going back many years. 

Employers will also need to be wary as to whether any of their practices have prevented those that they do class as workers from taking leave, as they could potentially be viewed in the same light. 

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