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Employment Law Case Update: The Sash Window Workshop Ltd and another v King

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Mr King worked for The Sash Window Workshop Ltd (SWW) as a commission-only salesman for 13 years. SWW classified him as self-employed, therefore he did not receive holiday pay when on annual leave. On termination of his employment at 65, Mr King brought a claim for unlawful deductions of wages covering his 13 year career at SWW and a claim for age discrimination.

Mr King argued that he had not taken his full annual leave entitlement each year because it would have been unpaid. The Employment Tribunal held that Mr King was a worker under the Working Time Regulations and awarded him holiday pay in respect of:

  • Leave accrued in the final leave year but untaken at the date of termination.
  • Leave requested and taken as unpaid leave in previous years, claimed as a series of unlawful deductions from wages.
  • Leave accrued but untaken in previous years.

The age discrimination claim was successful and not appealed. However, SWW appealed against the decision to award payment in respect of leave accrued but untaken in previous years.  The first two points were no longer in dispute.

The Employment Appeal Tribunal upheld the appeal on the grounds that Mr King had not been prevented by reasons beyond his control from taking annual leave. Mr King appealed to the Court of Appeal who referred the case to the European Court of Justice.  The Advocate General of the ECJ supported Mr King's arguments, stating that employers must provide adequate facilities for workers to take paid annual leave. If a worker has not taken some or all of their leave entitlement because their employer refuses holiday pay, the worker is entitled to say they’ve been prevented from exercising their right to paid leave. If this is the case, the leave is carried over until the worker has the opportunity to exercise that right, or until termination.

The ECJ held that a worker must be able to carry over unused holiday where the employer does not put the worker in a position to exercise the right to take paid annual leave in the first place.

The case is now back with the Court of Appeal to apply the ECJ ruling, which is due to be heard in 2018. The case is important for companies operating in the ‘gig economy’. Mr King’s success could encourage others to claim worker status.

The ECJ decision will have significant implications for those whose status has been misclassified as self-employed rather than worker, increasing the already high stakes in the gig economy status cases currently in courts and tribunals.

Employers could be liable to pay considerable amounts of money to workers on termination of employment, not only for unpaid holiday they have taken, but for holiday they have been discouraged from taking because it would have been unpaid. Even if employers start offering paid holiday going forward, liability for the past untaken holiday would remain, until termination of employment.

This article is from our weekly Employment Law Newsletter published on 18/01/2018.  If you would like to receive this newsletter directly and be kept up to date with recent cases and Employment Law news, email events@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.