Payment for leave not taken carries over, says ECJ legal advice

The European Court of Justice
The European Court of Justice. Photo: REX/Image Broker

If an employer does not provide a worker with paid leave, that worker’s right to it carries over until they have the opportunity to take it. If their employment is terminated, they have the right to payment in lieu of any leave outstanding.

That is an Advocate General’s opinion at the European Court of Justice (ECJ) in The Sash Window Workshop Ltd and another v King, but is not the final decision in this case.

If the ECJ agrees with the Advocate General, this case will have significant implications for employers that have not paid holiday pay to workers that they consider to be self-employed.

Mr King joined The Sash Window Workshop Ltd in 1999 as a salesperson, working on a commission-only basis, receiving no pay when he was on holiday or on sickness absence.

In 2008, Sash Window Workshop offered Mr King an employment contract, but he elected to remain “self-employed”. When he left in 2012, Mr King brought various claims in the employment tribunal, including a claim that he had been subjected to a series of unlawful deductions from wages on a continuing basis over 13 years.

Mr King claimed compensation for loss of holiday pay for the unpaid leave he had taken in some years, as well as pay for the holiday that he had accrued, but not taken, in other years. The tribunal upheld his claim.

Sash Window Workshop appealed to the Employment Appeal Tribunal (EAT), and Mr King cross-appealed. The issue for the EAT was whether or not the tribunal had been wrong in law to hold that Mr King was entitled to receive pay in respect of the holiday that he had accrued, but had not taken, in previous years.

A worker may now be able to wait until the end of his or her employment before challenging any failure by the employer to offer paid leave. Employers could face a large number of such claims, since a worker should no longer need to risk his job to bring it” – James Williams, barrister for Mr King

In the EAT’s view, sick leave may not be the only circumstance that would act as an impediment to a worker taking annual leave in the leave year in which it is accrued. The EAT suggested that workers should be allowed to carry over untaken holiday into the next year if they are genuinely prevented from taking annual leave for “reasons beyond their control” other than sickness absence.

However, the EAT found that despite Mr King’s evidence that he gave notice of his intention to take annual leave in respect of the holiday that he took each year from 1999 to 2012, there was no evidence that he ever gave any notice of an intention to take holiday that was refused.

The EAT remitted the case to the tribunal to be reconsidered. Mr King appealed to the Court of Appeal, which referred the issue to the European Court of Justice (ECJ).

The Advocate General considers that it is incompatible with the Working Time Directive to require a worker to take leave before the worker is able to establish whether or not he or she is entitled to be paid for it.

James Williams, barrister at Henderson Chambers who represents Mr King, said: “If the Advocate-General’s opinion is followed by the Court it will have profound consequences for many businesses with workforces of uncertain or marginal employment status.

“A worker may now be able to wait until the end of his or her employment before challenging any failure by the employer to offer paid leave. Employers could face a large number of such claims, since a worker should no longer need to risk his job to bring it.”

Philip Harman, partner at DAC Beachcroft, said: “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, among others.

“Today’s AG opinion is not binding on the ECJ nor UK employers at this stage. Nevertheless, employers will be watching the progress of this case carefully because, unless the ECJ limits the carry-over period, a finding of worker status could result in further holiday pay being due.”

Additional reporting by Fiona Cuming

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