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Holiday Pay is King!

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The Court of Justice of the European Union (CJEU) has handed down a landmark decision in King v The Sash Windows Workshop Limited C-214/16 relating to holiday pay which is bound to send a shiver down employers’ spines.

What are the facts?

Mr King worked for The Sash Windows Workshop Limited. It was alleged by The Sash Windows Workshop Limited that he was self-employed and therefore not entitled to paid holiday. There was no provision in his contract for leave. If he chose to take leave, this would be unpaid. As a result and because he was busy, he took no leave at all one year.

What claim did he bring?

Mr King brought a claim in the employment tribunal arguing that he was in fact employed and therefore entitled to paid holiday. The tribunal held that he was a ‘worker’ and therefore entitled to 5.6 weeks' paid holiday per year. The employer argued that Mr King had lost his holiday as he had not taken it in the leave year in which it accrued and he could not therefore claim his historic entitlement to paid holiday. It relied upon regulation 13(9) of the Working Time Regulations 1998 which provides that leave may only be taken in the leave year in which it accrues.

What was the outcome?

The right to paid holiday is a key right under the European Working Time Directive which the CJEU has refused, in past cases, to interpret restrictively.

Mr King’s claim failed in the employment appeal tribunal. The Court of Appeal referred the matter to the CJEU to determine whether the UK Regulations were incompatible with EU law. The CJEU held that a worker can carry over leave until the employment relationship ends if their employer has denied them the right to paid holiday including by failing to agree that the individual has ‘worker’ status.

Does this apply to all holiday?

This only applies to the basic minimum statutory entitlement of 20 days if you work full-time. The additional 8 days which covers bank and public holidays cannot be re-claimed.

What is the significance of this decision?

This judgment has far-reaching consequences. Taking the Uber litigation as an example, 40,000 taxi drivers with significant periods of service have argued that they are employed and not self-employed and therefore entitled to holiday pay. This is likely to be a catalyst for further claims. It will be interesting to see what happens next.

If you would like to discuss the significance of this case on your business, please do not hesitate to contact our employment team.

This article is not a substitute for legal advice on specific facts and circumstances. It is designed as a free update on the law at the time of publishing. BakerLaw LLP and/or the writer accepts no responsibility for reliance on this article and recommends that you seek independent legal advice on your specific circumstances prior to taking any steps.