Carrying over annual leave

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Carrying over annual leave

Published 8 junio 2017

We know that a worker’s annual leave can be carried over into the following holiday year if sickness absence prevents holiday from being taken. However, what happens if a worker is prevented from taking leave because they do not have the right to paid leave in their contract? For example, if they are incorrectly classed as self–employed?

This morning the Court of Justice for the European Union (CJEU) Advocate General (AG) has given an opinion in the case of King v Sash Window Workshop Ltd. This is another important holiday pay case. It considered whether there is a right to carry over annual leave from one leave year to the next and whether individuals can claim back pay for untaken leave in previous leave years on termination of employment. In the AG's opinion the answer to both these questions is "yes". We now await the CJEU's decision to see whether it agrees with the AG.

This case follows on from some of the Working Time Regulations (WTR) holiday cases which established that the bar on carry-over of untaken leave contained in the WTR does not apply where a worker is "prevented" from taking holiday due to sickness absence. This case looked at whether a worker is also "prevented" from taking their annual leave where an employer has wrongly classed an individual as self-employed therefore denying any right to paid holiday.

The AG has stated that where an employer has not provided a worker with paid leave, the right to paid leave carries over until 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.

What does this mean for employers?

This opinion is consistent with previous case law but also expands the scope of the right to carry over to situations where individuals are prevented from taking their leave for reasons other than sickness absence. If adopted by the CJEU this means that if an individual is found to be a worker and he can say he would have retrospectively taken more holidays had he been paid for them then the worker would be entitled to carry over the holidays until either:

  • he is given an opportunity to take them; or
  • he is paid for them on termination.

Significantly the AG indicated that in these circumstances there should not be any limit on carry over which could mean that individuals could claim holiday pay going back a number of years.

The case is particularly topical given the soon to be published Taylor Review and the recent high profile worker status cases involving Uber and CitySprint, amongst others. Today's AG opinion is not binding on the CJEU, nor UK employers at this stage. Nevertheless, employers who engage individuals on contracts that do not provide for paid holiday will be watching the progress of this case carefully as unless the CJEU limits the carry over period, a finding of worker status could result in further holiday pay being due.

All the major parties have addressed worker rights in their manifestos – promising to protect and build on them. So regardless of who is in government as at tomorrow morning worker status will be very much on the agenda.

We are keeping track of the Taylor Report as well as the other "gig economy" cases and will provide you with further analysis as and when there are any developments

Facts and background

Mr King worked for Sash Windows for 13 years on a self-employed basis as a salesperson (1999 – 2012). He was paid on a commission only basis.

As he was purportedly self-employed his contract was silent on the question of paid annual leave. In 2009 Sash Window offered Mr King an employment contract but he elected to remain self-employed. Some years, he took his full annual leave entitlement, but there were a number of years in which he did not request all of it. The tribunals accepted that Mr King would have taken more holiday had he been paid for his leave.

Sash Windows terminated his contract when he reached 65. Mr King brought claims in the employment tribunal for age discrimination and unpaid holiday pay under the WTR 1998. The employment tribunal accepted that both the company and Mr King had mistakenly believed that he was self-employed. He was in fact a worker.

Mr King brought his claim for holidays under 3 separate heads:

  • Holiday pay relating to paid leave accrued but untaken during Mr King's final (incomplete) leave year.
    Holiday pay relating to holiday which Mr King actually took during the previous 13 years with Sash Windows but was not paid.
    Holiday pay relating to leave which Mr King was entitled to by virtue of being a worker whilst working with Sash Windows but had not actually taken.

Mr King succeeded in the employment tribunal with respect to his claim for discrimination and paid holidays under all three heads, however, the claim for holiday under point 3 above was appealed to the EAT and then the Court of Appeal. The Court of Appeal referred the case to the ECJ.


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