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Published 29 November 2017
Today (Wednesday 29 November), the Court of Justice for the European Union (CJEU) has given its long-awaited judgment in the case of King v Sash Window Workshop Ltd and, in doing so, has opened the door to claims for unpaid holiday going back years.
This is another important holiday pay case and has significant implications for the right to holiday pay in the UK. It states that workers who are wrongly classified as self-employed contractors can claim back pay in respect of unpaid annual leave going back many years when their ‘worker’ status is established. The CJEU has stated that where an employer has not provided a worker with paid leave, the right to paid leave carries over until she or he has the opportunity to exercise it and, on termination of employment, the worker has the right to payment in lieu of leave that remains outstanding.
Reacting to the AG's opinion, Nick Chronias, Partner in the Employment & Pensions Group at international law firm DAC Beachcroft, said:
"This decision expands the scope of the right to carry over holiday to situations where individuals are prevented from taking their leave for reasons other than sickness absence. It means that if an individual is found to be a worker and can say he or she would have retrospectively taken more holidays had he or she been paid for them, then the worker would be entitled to carry over the holidays until he or she is paid for them on termination.
The CJEU has said that there should not be any limit on carry-over, which could mean that individuals may claim holiday pay going back a number of years. This principle might not be limited to individuals found to be a worker; it might apply to those who have had long-term absences or have not taken their leave for reasons other than sickness.
The case is particularly topical given the recent high-profile worker status cases involving Uber and Deliveroo and others. The CJEU said that it is irrelevant if the employer wrongly concludes that an individual is not entitled to paid holiday because he or she is self-employed. It is up to the employer to get this right and if it doesn't allow a worker to exercise his rights it must bear the consequences. This adds another layer of complexity for the government to consider on whether to change our laws on employment status in light of the Taylor report.
Finally, this case also suggests that the Regulations introduced to limit the backdating of claims for unpaid wages to two years may be incompatible with EU law. There are likely to be cases to explore this. If they went in favour of the employee, this would be bad news for employers facing claims for non-payment of overtime in the first four weeks of holiday pay."