Right to unclaimed holiday pay not lost after year end

The European Court of Justice’s (ECJ) decision in late November in King v The Sash Window Workshop Ltd [2017] EUECJ C-214/16 (29 November 2017) may have far-reaching impact on businesses which routinely use “self-employed” workers.

King, who was a commission only salesman, had his contract of 14 years terminated in 2012 when he reached the age of 65.

He claimed unlawful age discrimination, and a failure by the company to pay him both for the leave he had taken, and the untaken leave he could have been entitled to under the Working Time Regulations 1998.

At first instance the employment tribunal awarded King £3,000 for injury to feelings, and more than £9,000 in respect of holiday pay. King appealed against the award for injury to feelings, maintaining that the tribunal had failed to take full account of the humiliation, anger and stress stemming from his forced retiral, and the company appealed against the award of holiday pay, on the basis that entitlement fell at the end of the leave year, in the same way as entitlement to leave not taken. The EAT found that he did not have a contract of employment but he was a worker. Both appeals were successful before the Employment Appeal Tribunal. The EAT sent the case back for consideration by a fresh tribunal. King appealed to the Court of Appeal, which referred the question of holiday pay to the ECJ.

The ECJ held that workers cannot be required to take unpaid leave before making a claim for payment, and that it is not lawful to prevent a worker from carrying untaken leave forward until termination because his employer refused to remunerate the leave, as any other outcome would allow employers to benefit and the aims of the directive to be flouted.

The case now returns to the Court of Appeal, with clear guidance that Mr King’s award for untaken holidays should stand. In an ironic twist to this troubled and costly saga, the company had offered to take Mr King on as an employee, but he had refused, preferring to remain self-employed.