Paid Holiday: Unlimited Carry Over Until Worker Has Opportunity to Take it

Workers prevented from taking holiday because their employer will not pay them for it can carry over their entitlement to paid holiday until their employer provides them with the opportunity to take it.    

Speedread

Where a worker is prevented from taking their holiday because their employer refuses to pay them for it, they can carry over their entitlement until their employer allows them to take it.  On termination, the worker is entitled to pay in lieu of holiday not taken for the whole period of their employment.  This is the view of the European Court of Justice’s (ECJ) Advocate General.  If the ECJ agrees with the Advocate General when it gives its decision, this could prove expensive for employers who engage workers on a self-employed basis and do not provide paid holiday, when in reality they are workers.   

Facts

In The Sash Window Workshop Ltd v King, The Sash Window Workshop Ltd (SWW) engaged Mr King as a self-employed salesman from June 1999 until October 2012.  His contract did not mention paid holiday.  SWW offered him an employment contract in 2008, which included the right to paid holiday but he declined the offer, electing to remain self-employed.  When SWW terminated his engagement, he brought a claim for holiday pay.    

The employment tribunal ruled that he was a worker, not self-employed, and so was entitled to paid holiday. It upheld his claim for pay in lieu of accrued but untaken holiday for the whole period of his employment, on the basis that he had been prevented from taking holiday during employment as his employer would not pay him for it. 

When the case reached the Court of Appeal (CA), it asked the ECJ for a ruling on a number of questions relating to the Working Time Directive. 

Advocate General’s opinion

The Advocate General considered that employers are responsible for providing workers with the facility to take paid holiday.  If the employer does not provide them with this facility, for example by providing for the right to paid holiday in their contracts, the worker can claim that they have been prevented from taking it.  The right then carries over until such time as their employer provides them with the opportunity to take paid holiday and on termination they are entitled to pay in lieu of untaken holiday for the whole period of their employment.  There are no limits on the carry over period.   

As Mr King’s contractual terms were silent on the question of paid annual leave, his employer had not provided him with the facility to take it. It was possible that it had done so when it offered him an employment contract containing the right to paid holiday, but that was something for the Court of Appeal to decide.  If it had, Mr King would only be entitled to pay in lieu for the period from commencement in June 1999 until the date on which the offer was made in 2008.  Otherwise, he was entitled to pay in lieu of holiday not taken throughout the period of his employment.

Implications

If the ECJ comes to the same conclusion, it could prove costly for employers who engage people on a self-employed basis, but whose status is in reality that of a worker.  As a worker, they are entitled to paid holiday under the Working Time Regulations 1998, but their terms of engagement are unlikely to include any right to take paid holiday.  If their employer does not afford them the facility to take paid leave, they will be able to claim pay in lieu of untaken holiday on termination for the whole period of their employment. 

The ECJ is not obliged to follow the Advocate General’s opinion but in most cases it does.  The ECJ’s judgment is expected later this year.