King v Sash Window Workshop Limited - The Judgement

The European Court of Justice (“”ECJ”) yesterday published the Judgement of Advocate General Tanchev in the case King v Sash Window Workshop Limited (“SWW”).

The case was referred to the ECJ by the Court of Appeal for a preliminary ruling having been heard by an Employment Tribunal and Employment Appeal Tribunal in England.

The background to the case was that Mr King worked with SWW between 1999 and 2012. Importantly, he was not an employee of the company but worked on a self-employed commission only basis.

By date of termination of the relationship in 2012 when Mr King retired he had accumulated 24.15 weeks of untaken leave.  During his time with SWW Mr King either took holidays unpaid or in one year no holiday at all.

Following dismissal, Mr King claimed payment from SWW for all of the accrued but unpaid holiday and holidays taken which were unpaid.

The two relevant issues were  (a) was Mr King a “worker” under the legal framework and, as such entitled to 20 days annual paid leave? (b) did Mr King’s right, if any, to claim past accrued annual leave have a time limit for making a claim and, if so, when.

By the time the case reached the ECJ,  both sides had agreed that Mr King was a “worker”, entitled to 4 weeks holiday leave per year and entitled to receive payment for holidays taken but not paid. The issue for the ECJ was whether Mr King was entitled to make a claim for 24.15 weeks salary in respect of holiday leave accrued but not taken.

The Judgement of the ECJ sets out (a) the relevant legal provision from the 1970 Convention of the International Labour Organisation which refers to the right to claim annual leave and period for making such a claim. (b) The provisions of EU Directive 2003/88 Articles 1 and 7 which set out the right of an employee to have 4 weeks annual paid leave, and (c)  The Working Time Regulations 1998 Regulations 13,16 and 30 which provide for annual leave and the period for making a claim for unpaid holiday leave.

The Advocate General held that the employer had benefitted from Mr King not taking holiday leave and must bear the financial consequences. The fact that the employer genuinely considered that Mr King was not legally entitled to annual leave was, in the view of the Advocate General, irrelevant.

The consequences of this case for UK employers are:

1.If a “worker” is prevented from taking a paid holiday because the employer won’t grant paid holiday, the worker is being prevented from exercising EU rights and, as such, cannot be stopped from bringing a claim on the basis that a new holiday year has commenced.

2.Employers who fail to grant a paid holiday to workers will not be entitled to the benefit of time limits on how much holiday leave can be carried over.

3.Holiday pay claims can, in theory, be made to cover the period back to 1996, when the original Working Time Directive came into force.

Recent cases in the UK have seen courts and tribunals hold that self-employed contractors working for large organisations, including Uber and Pimlico Plumbers, are “workers”. Accordingly, those organisations will now face significant holiday leave claims.

Importantly, the decision of the Employment Appeal Tribunal in Bear Scotland v Fulton to the effect that Tribunals cannot award payment of unpaid holiday leave beyond any 3-month break is not compatible with the ECJ Judgement and employers cannot rely on the time limit protection. Similarly, employers cannot rely on protection from the Deduction from Wages (Limitation) Regulations 2014 which place a time limit on the period for making holiday pay claims.

The  significant decline in holiday pay claims following the Bear case and 2014 Regulations, combined with the now non-applicable Tribunal fee system for submitting such claims,  is likely to be reversed and all employers should consider who are employees and “workers” and what financial exposure they are facing should any employee or “worker” bring such a claim.

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.