Employers should ensure they have identified who are ‘workers’, and that they give them ‘adequate facilities’ to request paid holiday, or risk having to pay arrears for untaken holiday – even if the worker has not requested holiday – when the worker’s engagement ends.
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. 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, rather than a self-employed consultant, and had therefore been entitled to paid holidays. He claimed 13 years’ arrears of holiday pay, amounting to around £27000.
The general rule is that legal 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 and there is no need for the worker to ask to carry unpaid leave over into the next year.
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 Advocate General of the CJEU gave his opinion that, on the facts, the worker had not been given adequate facilities to request holiday, because he knew that if he asked to take paid holiday, the employer would refuse his request. The Advocate General said 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. In this case, the first opportunity for the worker to exercise that right arose when his engagement was terminated. The employee was therefore entitled to claim payment for untaken holiday at that time.
There was no requirement for the worker to have requested holiday in these circumstances, because the belief that he would not be paid if he took holiday was a deterrent to asking for it.
The Advocate General further ruled that unpaid holiday pay in this case should cover the full 13 years of the worker’s engagement up to termination, because it was only on termination that he had his first opportunity to exercise his right to paid holiday. However, the Advocate General did not refer to UK case law that states that there should be a three-month time limit in holiday pay claims.
The Advocate General’s opinion therefore implies that unpaid holiday can be carried forward, without the worker having to ask for it, both in cases involving sickness – but also in circumstances where a worker has not asked to carry forward untaken holiday because they believe the employer would refuse the request.
The Advocate General remitted part of the case to the UK as to whether the offer of employment in 2008 amounted to an ‘adequate facility’. It if was, the worker could only claim pay for untaken holiday up to the point he refused that offer.
The CJEU normally follows the opinion of the Advocate General, although it is not bound to.
Employers should make certain they have identified who are ‘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 – even if the worker has not asked to take holiday – when the worker’s engagement ends
Case ref: King v The Sash Window Workshop C:2017:439
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Jonathan Waters is the founder of Helix Law. Before qualifying as a Solicitor he worked in industry and in investment banking for over a decade. He was also the Partner in charge of Commercial Litigation, Employment Law and Property Litigation at Stephen Rimmer LLP. Jonathan has wide experience of helping and advising businesses to avoid or to deal with commercial disputes and in particular construction disputes.
This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice.