Holiday pay claims – an update

Background

Under the Working Time Regulations 1998 (WTR) holiday may only be taken in the leave year in respect of which it is due (regulation 13(9)). A worker must therefore take their holiday within the leave year or it is lost (with some exceptions for workers on certain kinds of leave, such as long term sick leave).

If an employee or worker has a holiday claim they can do the following:

·         Bring a claim under the WTR to be allowed to take holiday and to be paid for their holiday

·         Claim under the Employment Rights Act 1996 (ERA) for unlawful deductions of wages

Recent case on Holiday pay

In the case of King v Sash Windows, Mr King was believed to be self-employed and therefore was not given paid holiday.   A Tribunal held he was a worker and therefore entitled to 5.6 weeks paid annual leave.

The employer argued that Mr King had failed to take his holiday within the relevant leave years and it was therefore lost and his claims were out of time. Mr King argued he knew he would not be paid for his holiday and was therefore prevented from taking his entitlement to paid holiday. He claimed for payment in lieu of holiday for the years 1999 to 2012.

This case was referred to the Court of Justice of the European Union (CJEU) which held that where a worker is prevented from taking their paid holiday, because the employer does not grant paid holiday, they are prevented from exercising their rights.   Therefore, they should not be stopped from bringing a claim just because the leave year has ended as this would not allow for an effective remedy.

Further, the CJEU held that an employer who fails to grant paid holiday to its workers should not be entitled to the benefits of the normal limits on how much can be carried over.

This means that workers should be able to accumulate untaken leave from one year to the next where they have been prevented from taking it.

Although the ruling will only apply to the four weeks of EU holiday, rather than the whole 5.6 weeks, employers who thought they had self-employed contractors, who turn out to be workers, could find themselves facing substantial holiday pay claims. This is yet another unfortunate consequence of the uncertainty surrounding ‘employment status’ and, even with the recent Taylor Review, we still await any policy proposal from the government on how this may be resolved going forward.

If you are unsure about holiday pay and the status of your workforce, please do get in touch as we can help. You can contact us on 01730 268211 or at linda.wilson@macdonaldoates.co.uk