Holiday Pay claims: how far back can you go? The impact of King v Sash Windows C-214/16 CJEU

The decision of the CJEU in King v Sash Windows C-214/16 CJEU has been widely reported and discussed.

 

Mr King had worked for a considerable period of time- years, rather than months – without taking holiday. He had worked for a 13-year period but had been afforded the facility for exercise of the right to paid annual leave only in a minimal sense. He had thought that he was self-employed. He had been paid by way of commission. The contract was silent on the issue of leave. It was described as a “self-employed commission only contract”. He did not try to invoke the right to paid annual leave until the employment relationship was terminated.

 

The Court of Appeal made a reference to the CJEU as to the circumstances in which untaken paid leave can be carried over. The Court wondered whether the worker needed actually to try to take the leave before the issue of payment arose. The Court of Appeal had doubts, in any event, as to whether paid leave could be carried over indefinitely.

 

The Advocate General pointed out that the problem was of “acute social importance, given the increasing number of people across the European Union who work on flexible, casual, and intermittent bases”. That is doubtless correct, given the ever-expanding gig economy.

 

The relevant Directive (Directive 2003/88) requires member states to ensure that workers are entitled to paid annual leave of at least four weeks, which may not be replaced by an allowance in lieu except where the employment relationship is terminated.

 

The Judgment itself (available here) is interesting reading, and relatively short, although not exactly light reading.

 

The key points are that:

 

  1. In the case of a dispute between a worker and his employer as to whether the worker is entitled to paid annual leave in accordance with Article 7 of Directive 2003/88, European law precludes the worker having to take his leave first before establishing whether he has the right to be paid (paragraph 47)
  2. The Court of Appeal had asked (in short) whether Article 7 of Directive 2003/88 precludes national provisions or practices which prevent a worker from carrying over and/or accumulating paid annual leave rights in circumstances where the worker did not take the leave because the employer refused to pay (paragraph 48)
  3. European law does not permit Member States to exclude the right to paid annual leave or to provide for the right to paid annual leave of a worker, who was prevented from exercising that right, to be lost at the end of a period fixed by national law (paragraph 51)
  4. A worker who was unable to take his leave due to sickness would be able to accumulate leave (paragraph 63, and from already-familiar European case law)
  5. By the same token, Article 7 had to be interpreted as precluding national provisions which prevent a worker from carrying over and/or accumulating until termination of employment paid annual leave rights which had not been exercised in respect of several consecutive reference periods because the employer refused to remunerate that leave.

 

Advocate-General Tanchev’s written opinion is here and is also worth a browse.

 

The real sea-change which this decision is likely to herald is that holiday pay claims can now stretch back, in principle, until 1996, when the original Working Time Regulations came into force. That is directly contrary to the current principle established in Bear Scotland Ltd v Fulton [2015] I.C.R. 221, that (put simply) a three-month gap in a series of deductions breaks the series, so as to prevent a claimant from pursuing historic deductions which precede the gap. And the decision will obviate the two-year backstop implemented by the Deduction from Wages (Limitation) Regulations 2014.

 

The decision therefore has a very significant knock-on consequence, which is that holiday pay claims have increased dramatically in potential value. And that, in turn, increases the value of arguments about worker status.

Ezra Macdonald