Employers who have wrongly classed their workers as self-employed contractors could now face substantial claims for unpaid holiday, following a recent ruling by the European Court of Justice (ECJ) in the case of King v The Sash Window Workshop Ltd.
Latham Parry, a solicitor specialising in Employment Law in Warrington, says that the ECJ ruling in King has significant ramifications in relation to the right to holiday pay in the UK.
Mr Parry, who heads the Employment Law Team at Watsons Solicitors, Warrington, said: “Companies often regard people who work for them as self-employed, independent contractors, but the reality isn’t always so. The employment tribunals and courts have recently dealt with a number of high profile cases including Uber, Addison Lee and CitySprint, where so-called self-employed contractors have been able to establish ‘worker’ status, meaning that they acquire certain legal rights, including the right to paid annual leave.
“The EJC decision in King means that an employer who prevents a worker from taking paid holiday because the employer refuses to grant paid holiday, for example, because the employer wrongly classes the individual as self-employed, is preventing the worker from exercising EU rights.
“The decision goes further and means if the employer refuses to grant paid holiday, the worker can now carry over his entitlement to the following holiday year and therefore accumulate these rights from previous years.
“Claims for holiday pay could potentially be made to as far back as 1996, when the original Working Time Directive came into force.”
Established as an Employment Law solicitor in Warrington, Mr Parry added: “The ruling applies to four weeks’ European annual holiday, so each worker could claim up to 4 weeks’ holiday pay for the last 20 years, or 80 weeks’ pay. This could be financially disastrous for companies which have wrongly classed large numbers of their workers as self-employed.”
In King, Mr King had been believed to be self-employed, so his ’employer’ had not granted paid holiday.
An employment tribunal then held that he was a worker, entitled to 5.6 weeks’ paid annual leave under the Working Time Regulations 1998, and also that he was entitled to compensation for holiday not taken in previous years.
The employer argued that the Working Time Regulations 1998 provide that, if paid holiday is not taken in a leave year, it is lost, and successfully appealed to the Employment Appeal Tribunal on this point.
Mr King appealed to the Court of Appeal, which then made a reference to the ECJ.
The ECJ said that any worker prevented from taking paid holiday because the employer refuses to grant it, is being denied his EU rights. The ECJ also held that an employer who fails to grant paid holiday to workers should not be entitled to the benefits of the normal limits on how much can be carried over.
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