European Court Confirms Worker’s Right to Claim Holiday Pay for the Previous 13 Years
The European Court of Justice has ruled that upon termination of his/her contract a worker is entitled to be paid for any periods of annual leave that have accrued and not been taken where the worker has not taken the annual leave due to the fact that it was unpaid.
In the case of King –v- The Sash Workshop Ltd and another Mr King worked as a self-employed commission based salesman for 13 years between 1999 and 2012. Although he was self-employed he was held to have worker’s rights and therefore an entitlement to paid holiday pursuant to the Working Time Directive, which is incorporated into UK law by the Working Time Regulations 1998. Mr King’s contract was terminated and he brought a claim for arrears of holiday pay in respect of holiday that he did not take.
The Court of Appeal referred the matter to the European Court of Justice which has now ruled that where a worker has not exercised his/her right to take holiday over a period of time because he/she had been discouraged from taking the holiday because it would be unpaid, the Working Time Directive requires that the worker be allowed to carry over their paid holiday rights until the termination of employment. Consequently the worker is entitled to be paid on termination for all periods of holiday that have accrued and there is no limit upon the amount of holiday that can be carried over.
This decision will have major consequences and implications for employers of gig economy workers. Those employers of workers could be required to pay large sums of money to workers on termination of their contracts, not only for the unpaid holiday that they have taken but also for the holiday they have not taken because they have been discouraged from taking it because it would have been unpaid.
As with most cases involving holiday entitlement this is not the end of the story and there is not a clear ruling on all potential situations. This particular case only deals with the situation where a worker has not taken his/her entitlement to annual leave because he/she believed it would not be paid. The case does not deal with the situation where a worker has taken leave but not been paid for it. Nor does it deal with whether or not the UK limitation rules would continue to apply to claims for unpaid holiday pay.
There are therefore still a number of issues that need to be resolved and no doubt it will only be a matter of time before we see claims in the Employment Tribunal dealing with such issues.