Mr King worked for The Sash Window Workshop Limited ("SWW") on a self-employed basis on a commission only contract from 1 June 1999 until he retired on 6 October 2012. His contract was silent as to holiday pay.

When he took holiday it was unpaid. Upon termination of the relationship with SWW he sought to recover pay for holiday including holiday that he hadn’t taken during the whole period of his engagement. SWW disagreed that he was entitled to a sum for the 24.15 weeks claimed and declined to pay him.

At first instance the Employment Tribunal agreed that Mr King was a “worker” within the meaning of the EU directive implemented by the Working Time Regulations 1998 (WTR). SWW said Mr King was not entitled to carry over his entitlement to be paid for accrued holiday from one year to the next and successfully defended the matter in the Employment Appeal Tribunal on this basis.

The case was referred by the Court of Appeal to the ECJ for a preliminary ruling on whether certain directives were applicable. The ECJ noted firstly, that the UK Working Time Regulations don’t allow carry over of “Euro” annual leave from one year to the next and secondly, that previous rulings as to holiday carry over had only been given in the context of a person on ill health absence who is prevented by ill health from taking leave. The ECJ drew a distinction between an ill health situation and Mr King’s situation where there had been a failure to mention or remunerate holiday at all. Mr King also claimed his right to be paid out for untaken holiday did not arise until his engagement ended and that as such he was neither out of time for bringing his claim nor prevented by domestic legislation from claiming payment in lieu.

The following principles were re-stated by the ECJ:

  • A worker has the right to at least four weeks holiday
  • Paid holiday is a particularly important social law from which there can be no derogation
  • “Euro” holiday must be paid and member states mustn’t make payment of it subject to preconditions
  • Money paid for holiday must be comparable to what is paid for working

Uncertainty of the terms of engagement might dissuade a worker from taking holiday and the ECJ said that as such is incompatible with the right to take minimum paid holiday. It was irrelevant that Mr King could have accepted an employment contract had he wanted to and that he didn’t do so. The fact of contractual silence on the issue of holiday pay meant that it was beyond his control whether he could be take paid holiday or not. The ECJ said that SWW had benefited from the fact that Mr King had not taken the bulk of his holiday entitlement and he had instead been a particularly reliable individual.

To summarise, the ECJ’s view was that domestic legislation that gets in the way of the above key principles will not help employers to avoid holiday pay liability for the first 20 days of holiday. Employers are reminded by this case that for the purposes of Euro holiday, the definition of a “worker” is broader than the domestic definition of worker. Erring on the side of caution, employers should, for these purposes bear in mind that the ECJ is likely to consider the definition of a worker entitled to holiday pay as being : “any person who pursues real, genuine activities, to the exclusion of activities on such a small scale as to be regarded as purely marginal and ancillary”.

For further information relating to the points raised in this article, please contact Joan Pettingill, Director in our Employment 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.

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