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Carrying Over Holiday Pay

View profile for Chris Amys
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Mr King was employed by The Sash Window Workshop for over 13 years. He was paid commission only and his Contract was silent on the issue of holiday pay. Mr King was never paid when he took time off for holiday.

In 2008, the Company offered Mr King a Contract of Employment, but he opted to stay self-employed and continued to do so until he was dismissed in 2012.

Mr King brought numerous claims against the Company including a claim that he was entitled to holiday pay for the previous 13 years. He succeeded in the Employment Tribunal and Employment Appeal Tribunal which held that a worker was entitled to carry over paid holiday or receive it in lieu on termination.

The case was appealed to the Court of Appeal (CA), who in turn has asked the European Court of Justice (ECJ). It is standard practice for the ECJ to ask the Advocate General’s (AG) opinion prior to the ECJ hearing.

The AG stated it would not be compatible with the law to require a worker to take leave before they knew if they would be paid for it. Essentially this reinforces employee’s rights, namely that upon termination of an employment relationship, a worker is entitled to an allowance in lieu of paid annual leave that has not been taken up.

Essentially this means where a worker does not use their entitlement to paid holiday because they would not be paid by their employer, the worker can claim he was prevented from exercising his right to such paid leave. The right then carries over until the worker has had the opportunity to exercise it – in this case on termination of employment. The worker does not have to ask to take his leave first before being able to establish whether he is entitled to be paid for it, because the risk of not being paid for the leave would be a deterrent to taking it.

This opinion by the AG is not legally binding. However it could be used by the ECJ’s judges who are now deliberating their decision and will give their ruling in the coming months. Companies should note that the ECJ usually follows the opinion of the Advocate General.

After the ECJ hearing, the case will return to the CA, which will decide what should be done in Mr King’s case.

This case is one of a series that have gone to the ECJ in Luxembourg to establish whether businesses operating in the gig economy are depriving individuals of benefits to which they should be entitled.

While most businesses will not be affected, those that engage workers on a commission-only basis, or on other such non-standard contracts, and do not provide for paid holiday, may be hit hard as a result of potential rulings of the ECJ and Court of Appeal. A final court ruling confirming the Advocate General’s opinion could impose substantial costs on many UK firms that have operated similar employment practices to that of The Sash Window Workshop.

For further information about how this could affect your business, please get in touch with Sally Morris at sally.morris@mfgsolicitors.com or on 01905 734032.

 

 

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