1 Jun 2019
While we’re still in the EU, we still have to play by its rules – particularly where workplace legislation is concerned. Here, the author details a landmark EU ruling on paid annual leave.
Mark Stevens
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Image © iQoncept / Adobe Stock
The Working Time Regulations 1998 set out workers’ rights to paid annual leave – and in a landmark ruling by the Court of Justice of the European Union (CJEU) in late 2017, UK law was found to be incompatible with EU legislation.
In essence, the CJEU confirmed that where a worker is refused his or her paid annual holiday, his or her entitlement to paid annual leave will carry over to the next holiday year.
The case, King v The Sash Window Workshop Limited (SWW), was brought by Conley King, who was engaged by SWW from June 1999 until October 2012 as a self-employed commission-only salesman. King’s contract made no reference to any entitlement to paid annual leave and, throughout his time at SWW, he had not taken any paid holiday.
During the period he was engaged by SWW to provide it with services, he was offered an employment contract. He turned this down. Following the end of the relationship, King brought a claim for unpaid holiday pay in the Employment Tribunal (ET), seeking 24.15 weeks as compensation for unpaid annual leave entitlement.
SWW opposed this claim, arguing the Working Time Regulations 1998 state that if paid holiday is not taken in a leave year, then it is lost and cannot be carried over into the subsequent year.
The ET found King was a “worker”, which entitled him to paid annual leave. A number of appeals then followed the initial decision, with the case making its way to the Court of Appeal before being referred to the CJEU regarding the question of holiday pay entitlement.
The CJEU noted that SWW had benefited from King not taking the annual leave that he, as a worker, had been entitled to and went on to say that denying workers holiday pay effectively prevents them from exercising their right to paid annual leave.
In addition, the CJEU said a claim for accrued annual leave entitlement in these circumstances cannot be prevented because another holiday year has started, and that this principle was incompatible with EU law.
Crucially, the CJEU said the normal time limits concerning how much holiday can be carried over into a new holiday year do not apply when an organisation has failed to grant paid annual leave to their workers. This means workers could be entitled to claim the accrued, but unused, holiday entitlement owing to them when their appointment ends.
Further, the worker could claim compensation for the leave he or she decided not to take because he or she considered this leave would have been unpaid.
While the ruling only applied to the first four weeks of annual leave entitlement required under the relevant EU legislation – rather than all 5.6 weeks set out in legislation in England and Wales – practices could have faced substantial bills if they needed to pay several workers for several years of unpaid annual leave on the termination of their engagement.
The problem for SWW was it had to convince the Court of Appeal that it could not read words into EU law to give effect to this judgement. Two recent CJEU rulings make it extremely difficult to now argue this.
In light of this decision, practices should look carefully at those individuals engaged on a self-employed basis, who may now pursue complaints alleging that they hold worker status and have been denied paid annual leave.
Workers could argue they should receive back holiday pay in respect to holiday they were unable to take. This gives the risk of an individual being found to be a worker real teeth; Conley King was able to recover 13 years’ worth of untaken annual leave entitlement.
