Holiday pay – Is it any clearer?

The Court of Justice of the European Union (“CJEU”) recently handed down its decision in the matter of King v Sash Windows. The issue in the case was whether a worker was entitled to carry over his holiday entitlement or whether it was lost at the end of each holiday year. Mr King had not taken his holiday because his employer had refused to pay him for it. The employer argued that the holiday was lost.

The CJEU has consistently confirmed that it is a central European right to be paid holiday and that it cannot be interpreted respectively. It is therefore not surprising that the CJEU found in Mr King’s favour (i.e. his holiday carried over and was not lost) and found that preventing a worker from taking holiday because their employer will not grant the paid holiday, prevents them from exercising EU rights. Any UK Regulations that provides the right is lost, is incompatible with EU law. The CJEU went further by stating that if an employer fails to grant holiday pay, the employer should not be entitled to benefit from the normal limits on how much holiday can be carried over as back pay can go back to 1996, when the Working Time Directive came into force.

Doubt has therefore been caused over whether the decision of the Employment Appeal Tribunal in Bear Scotland v Fulton can now survive. This case stopped an unlawful deductions claim wherever there was a longer than three month gap.

This decision of the CJEU will undoubtedly cause an influx of claims regarding worker status (i.e. disputes as to whether a ‘self-employed’ contractor is in fact a ‘worker’ and therefore entitled to holiday pay). Furthermore, it will likely cause major concern for those employing ‘self-employed’ contractors who turn out to be ‘workers’ as they could face hefty holiday pay claims. With Tribunal fees recently being deemed unlawful, there will no doubt be an increase in working time holiday pay cases, which were rare under the fees regime.