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'Workers' must be able to carry over paid annual leave

Napthens - December 19th 2017

Back in June we reported how the European Court of Justice (ECJ) called upon the Advocate General to advise them on the case of The Sash Window Workshop and another v King. Mr King worked as a self-employed, commission-only, salesman for Sash for 13 years and did not receive holiday or sick pay. Upon termination of his contract he brought a claim for unpaid holiday leave, arguing that he failed to take his full entitlement on the basis that it was unpaid and would consequently be out of pocket.

Significantly the ECJ agreed with the Advocate General’s earlier opinion that Mr King was entitled to paid annual leave. In their judgment the ECJ found that “the employer was able to benefit, until Mr King retired, from the fact that he did not interrupt his professional activity… to take paid annual leave”.

The ECJ also added “An employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences”. They also declared that ignorance of the employer as to Mr King’s employment status, was no defence for failing to pay both holiday and sick pay. In fact, they found that the onus was on the employer to seek out their obligations as to whether Mr King was entitled to paid leave.

With an estimated one million workers working within the “gig economy” in the UK, this ruling could potentially have far reaching consequences; especially where workers challenge their employment status. With employers who get it wrong now potentially facing significant financial penalties.

A key point to note is that previously under the Deductions from Wages (Limitation) Regulations 2014 there was a two year limit on claims for holiday pay. However, following the ruling in Sash this two year limitation no longer applies and could now go back as far as 20 years. Although this ruling only applies to the 4 weeks’ EU holiday, as opposed to the 5.6 weeks entitlement in the UK, workers could still potentially claim up to 80 weeks holiday.

Finally, the ECJ have highlighted the importance of a paid holiday in managing health and safety. Namely, by allowing workers to recover from the demands of work and workers should not be deterred from taking such holiday due to financial pressures of not being paid for such leave.

Best practice would be to undertake a review of all of your workers to ensure that they are given at least the minimum entitlement to paid holiday, being at least 5.6 weeks’. Where any workers have been denied this right, employers should ensure that they try to remedy this, as any potential claim could be costly.

Should you require assistance on this matter please do not hesitate to contact the Napthens specialist employment team.