The case involves Mr King who was originally engaged on a commission only/self-employed basis and potentially has important ramifications for employers and workers who operate in the Gig economy.
Mr King originally worked for The Sash Window Workshop Limited on a commission only basis from 1999. In 2008 the company offered Mr King the opportunity of becoming an employee. Mr King rejected that offer and subsequently entered into a contract with the company on that basis. The contract that Mr King and the Company entered into was silent on the issue of annual leave. Mr King took annual leave from time to time but there was never any discussion about whether or not he was entitled to be paid by the company in respect of that leave. The company ended its relationship with Mr King in October 2012 after he turned 65.
Mr King subsequently issued an employment tribunal claim against the company alleging (amongst other things) that the company had failed to pay him any holiday pay. The employment tribunal concluded on the facts of the case that Mr King was a ‘worker’ and that he had not genuinely been self employed. Relying on that finding, the employment tribunal went on to award Mr King compensation in respect of the annual leave that had been accrued but unpaid during the entirety of his 13 year tenure with the company. The company appealed that outcome to the Employment Appeal Tribunal (“EAT”). The EAT found that Mr King had not been prevented from taking annual leave by the company and concluded on that basis (in accordance with Working Time Regulations 1998) that the employment tribunal’s decision to award Mr King the entirety of his unpaid annual leave was incorrect. The EAT stated that there was no reason to depart from the standard position in the Working Time Regulations which states that in most cases entitlement to annual leave expires at the end of the relevant year.
Mr King did not agree and the EAT’s decision to limit his holiday pay claim was appealed to the Court of Appeal. The Court of Appeal subsequently made a reference to the European Court of Justice (“ECJ”) in relation to the following key aspects of Mr King’s appeal
In providing his opinion to the ECJ, Advocate General Tanchev, noted that previous case law decisions have confirmed the right for individual Member States to pass domestic legislation imposing reference and carry-over periods in respect of an individual’s entitlement to annual leave. However, and in an important development, he went on to state that it would be contrary to the spirit and intended purpose of the Working Time Directive if those national provisions could be used to deny an individual the right to paid annual leave in circumstances where that individual’s right to take paid annual leave had not been established. Building upon this principle, the Advocate General confirmed that employers must provide their employees and/or workers with an ‘adequate facility’ to take paid annual leave. Typically this adequate facility will commonly take the form of an express contractual clause or policy setting out an individual’s paid annual leave rights. It follows that where this adequate facility does not exist then any domestic legislation concerning paid annual leave reference and/or carry-over periods must, by necessity, be disapplied. The Advocate General went on to confirm that it would be for the Court of Appeal to determine whether, on the facts of Mr King’s case, the required ‘adequate facility’ had at any stage been provided.
It is important to note that Advocate General opinions are not binding on the ECJ. However, the ECJ frequently follows them and there is every likelihood given the flood of recent holiday pay decisions that it will choose to do so in the present case. The case is likely to be of particular interest and importance to employers and individuals working in the gig economy; especially where such individuals are or have been classified incorrectly as being self-employed.
For further information relating to the points raised in this article, please contact Nathan Combes, Senior Associate in the Employment Law Team.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.