Case law: Employer who didn't give worker 'adequate facilities' to take paid holiday must pay 13 years' arrears of holiday pay

Employers must ensure they have identified their 'workers', and that they have given them 'adequate facilities' to request paid holiday. Otherwise, they risk having to pay arrears for untaken holiday when the worker's engagement ends, even if the worker has not asked to take holiday - the CJEU has confirmed.

An individual was taken on as a 'self-employed consultant', and paid on a commission-only basis, for 13 years. Consultants - unlike workers and employees who are entitled to a statutory four weeks' paid holiday - are not entitled to paid holiday under the Working Time Regulations. He did take various periods of leave but they were unpaid. At one stage, in 2008, he was offered employment which would have entitled him to paid holiday, but he refused it.

When his work ended, he claimed he had been a worker all along, not a self-employed consultant, and had therefore been entitled to paid holidays. He claimed 13 years' arrears of holiday pay, amounting to around £27,000.

The law says that entitlement to the statutory four weeks' paid holiday expires at the end of each year - untaken holiday cannot be carried forward (and pay in lieu of untaken holiday cannot be paid). However, there is an exception where the employer has not provided 'adequate facilities' to workers to exercise their right to take holiday. In such cases - for example, where a worker cannot take holiday because they are off sick - leave can be carried forward. This happens automatically.

The UK Court of Appeal referred the case to the Court of Justice for the European Union (CJEU) for a decision on whether a worker has the right to carry forward holiday entitlement in those circumstances, and if so whether any carried forward holiday has to be taken within a specified period.

The CJEU has confirmed that, on the facts, the worker had not been given adequate facilities to request holiday because he knew that had he asked to take paid holiday, the employer would refuse his request. The CJEU stated that the right to paid holiday is, in the absence of adequate facilities to ask for it, carried over until the worker first has an opportunity to exercise it. The first opportunity for the worker in this case to exercise that right arose when his engagement was terminated. The CJEU therefore ruled that unpaid holiday pay should cover the full 13 years of his engagement up to termination, because it was only on termination that he had his first opportunity to exercise his right to paid holiday.

There was no requirement for the worker to have actually requested holiday, because the belief that he would not be paid if he took holiday was a deterrent to asking for it.

The case will now be heard by the Court of Appeal. It is likely to follow the CJEU Opinion, which means the Government is likely to change existing UK case law which supports a three-month time limit in holiday pay claims.

Operative date

  • Now

Recommendation

  • Employers should make sure they have identified the 'workers' in their organisation, and that they have given them 'adequate facilities' to request paid holiday, or risk having to pay arrears for untaken holiday when the worker's engagement ends - even if the worker has not asked to take holiday

Case ref: Cā€‘214/16 King v The Sash Window Workshop ECLI:EU:C:2017:914

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